A transformational shift is expected with the deployment of electric vehicles (EV) in India, significantly impacting existing automobile parts suppliers who will face severe competition from new entrants like technology firms and battery makers, according to a EY report.
From the perspective of component suppliers, large players are likely to adapt to the dramatic changes, however, small firms could be hit the hardest by this disruption, said the report titled ‘Electrifying India: Building blocks for a sustainable EV ecosystem’
It also pointed out to the urgent need for investment in domestic R&D and manufacturing capabilities to address the issue of absence of a EV supply chain.
‘Profound changes’
“The growth of EVs will lead to profound changes in the automotive value chain, including technology, manufacturing systems, ownership models, distribution and aftermarket support,” it said.
Explaining why such a scenario is expected, it further said an EV is relatively simpler to build with only 20 moving parts against around 2,000 in an ICE (internal combustion engine) vehicle.
This would have a significant impact on the incumbent automakers while also disrupting the supplier ecosystem on the back of a major decrease in the addressable market for vehicle repairs/service and would require them to build new capabilities, it added.
“This transformational shift is expected to have significant implications for the existing supply chain as well,” EY said. From the perspective of component suppliers, large automotive suppliers are likely to adapt to the dramatic changes; however, small players could be hit the hardest by this disruption, it said.
