Transformation to Electric Vehicles may Impact the Businesses of Auto Part Suppliers and Small Players: EY Report

Electric Vehicles may Impact the Businesses of Auto Part Suppliers and Small Players | Insights Success

Electrical Vehicle (EV) market is expected to witness a gigantic transformation in coming years. Experts believe that stricter emission norms, reducing battery prices and increased awareness would ultimately lead towards increased adoption of electric vehicles in India. Market insiders are expecting a double digit growth (annually) in sales of EV till 2020. However, one concern is also brewing up in the industry related to auto parts suppliers business. One recent report published by a renowned consulting firm EY has predicted that this massive transformational shift from ICE (Internal Combustion Engine) vehicles to EV can severely impact the business of existing automobile parts suppliers and small players.

The report further revealed that- big players who are into the component supply businesses may adapt this dramatic change and survive, but small firms could get hit the hardest due to this disruption.  Moreover, this transformation can severely impact automotive value chain including distribution, aftermarket support, ownership models, manufacturing systems and technology at large.

Electric vehicles are simpler to build and require only 20 moving parts to complete its manufacturing while a vehicle based on ICE engine needs 2,000 moving components to complete its production. This scenario itself shows how much less components a manufacture will require crafting an automobile based on electricity. As a result, it impacts the businesses of component manufacturers and suppliers to a large extent. “The existing suppliers will also have to face stiff competition from the new entrants in the industry such as battery producers and technology companies,” EY stated in its statement.

Further, after sales and service businesses may also witness a sharp decline in terms of their revenue, once this electric vehicle concept gets rolls-out on a full-fledged mode. However, many newer opportunities would get emerge in post ICE scenario i.e. of manufacturing components like battery, motors, microprocessors and controllers.

On a larger note, many stakeholders are seeing the roll-out of electric vehicles road map as a stepping stone towards crafting an eco-friendly transportation infrastructure in India but there are some genuine aspects where one has to put their attention into. “One of such issue is to make the availability and accessibility of recharge stations at different corners of the country at shorter distances. Absence of such vital EV supply chain in the country could hinder the growth of electric vehicles in India,” added the report.