In response to increasing market penetration, auto auxiliary businesses are increasing their expenditures in manufacturing and research and development (R&D) facilities to serve the expanding electric vehicle (EV) industry in India.
According to data provided by the Federation of Automobile Dealers Associations, the penetration of e-two-wheelers (E2W) increased to 4.5% in FY23 from 1.9% in FY22. Sales of e-passenger cars increased by 153.47 percent in FY23 compared to the previous year, and e-three-wheelers increased by 118.25 percent within the same time frame.
The Farrukhnagar facility is anticipated to be operational in the second part of FY24 and would produce EV-specific items such battery management systems (BMSs), chargers (on board and off board), body control modules, and AC-DC converter.
At a cost of around Rs. 110 crore over the following six years, a new plant is being built in Bawal, Haryana. By the end of FY24, the Bawal factory, which will produce traction motors for EVs, is anticipated to be operational.
Tyre manufacturers are also embracing electric vehicles. In order to meet the requirements of EVs, such as better torque, reduced noise, heavier weight on the tyres due to battery weight, and ideal rolling resistance for longer range, EV-specific tyres have been developed.Given the growing significance of EVs, a sizeable portion of our R&D budget is being used to produce tyres for various EV sectors.
Another area of expertise is lubricants. A line of EV gearbox fluids, coolants and greases called ON was introduced by Castrol in 2022 on a global scale. Currently, two out of every three major automakers use ON fluids as part of their EV factory fill.
It is still unknown whether supporting industries will slow down their move towards EVs in light of the declining EV sales in the first few months of FY24 and the government's reduction in its subsidy programmes.