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Automotive Technology
Electrification of vehicles in India is the most debatable topic. In an EV- components like battery, cells & powertrain have a major role to play as it constitutes ~60% of total cost
A🧵on understanding of EV components, initiatives taken & some interesting cos to look at:
1/n
A🧵on understanding of EV components, initiatives taken & some interesting cos to look at:
1/n
Industry value chain:
Co’s are engaged in either manufacturing Lithium-Ion (Lion) cells/Cell assembly/Battery management system(BMS) or Motors & controllers segments.
- Lion acts as raw material for batteries
-BMS & Motors-controllers regulate optimal use of residual energy
2/n
Co’s are engaged in either manufacturing Lithium-Ion (Lion) cells/Cell assembly/Battery management system(BMS) or Motors & controllers segments.
- Lion acts as raw material for batteries
-BMS & Motors-controllers regulate optimal use of residual energy
2/n
Currently, only basic BMS is manufactured in India. It provides v. limited features whereas Smart BMS provides premium features which are being used by a few EV OEMs; Ather and Ola.
We might expect a structural shift towards smart BMS & this might impact basic BMS players.
3/n
We might expect a structural shift towards smart BMS & this might impact basic BMS players.
3/n
In India, Batteries are imported at a cost of $100-$170KWH (reduced at 19% CAGR since last 8 years) from the eastern countries, but the effective cost after factoring in cell assembly & BMS set up comes at $240/KWH.
4/n
4/n
Entry barrier in Lithium-Ion industry:
Due to a high capital intensive business with large initial investment of ~1100crs required just to set up 1GWH.
So, the existing ones are more likely to become bigger as the cost will decline for them as the economies of scale kick in.
5/n
Due to a high capital intensive business with large initial investment of ~1100crs required just to set up 1GWH.
So, the existing ones are more likely to become bigger as the cost will decline for them as the economies of scale kick in.
5/n
Batteries can be made using NMC or LFP cells. Global OEMs are shifting to LFP due to low costs. Even for India, shifting to LFP batteries makes sense as there will be no dependence on scarce materials- Nickel & cobalt.
Commentaries of Co's which are shifting including Tesla👇
6/n
Commentaries of Co's which are shifting including Tesla👇
6/n
Can India manufacture these EV components? No!
Lion cell: Co’s like Hero, Ola & Tata motors import cells from South Korea, Japan & China
Motor & controller: Partly imported by Ola,Ather, Bajaj & Tata motors
Also, many technology tie-ups with MNC's are happening in this space
7/n
Lion cell: Co’s like Hero, Ola & Tata motors import cells from South Korea, Japan & China
Motor & controller: Partly imported by Ola,Ather, Bajaj & Tata motors
Also, many technology tie-ups with MNC's are happening in this space
7/n
Cell assembly- Players like Hero, Ampere, Bajaj Auto & Tata Motors get cells assembled from small players and Ather & Ola assemble the cells in-house.
Pure-play assemblers might get obsolete as globally battery is usually assembled by manufacturer or OEM itself.
8/n
Pure-play assemblers might get obsolete as globally battery is usually assembled by manufacturer or OEM itself.
8/n
Eastern & European countries dominate the EV ecosystem globally. Indian EV players like Exide, Reliance, Lucas-TVS are going on the right path by tying up with foreign co's.
Amara Raja, Amber, Ashok Leyland have also collaborated with IIT Madras & ISRO for technologies.
9/n
Amara Raja, Amber, Ashok Leyland have also collaborated with IIT Madras & ISRO for technologies.
9/n
So, clearly, India is highly dependent on imports/tie-ups with MNCs for EV components.
But there are many measures taken by govt for localization:
(i) Announced PLI scheme of Rs 450bn of advanced chemistry cell leading to an incentive of Rs181 bn.
10/n
But there are many measures taken by govt for localization:
(i) Announced PLI scheme of Rs 450bn of advanced chemistry cell leading to an incentive of Rs181 bn.
10/n
(ii) Govt also announced FAME II which will:
- Support battery assembling & manufacturing of many parts in India itself
-Provide subsidy of 15k/KWH (~$200KWH- an 83% reduction in cost of E-2wheeler)
-Reduce GST rate to 5%
-Allocate ~ Rs 1,000crs towards charging stations
11/n
- Support battery assembling & manufacturing of many parts in India itself
-Provide subsidy of 15k/KWH (~$200KWH- an 83% reduction in cost of E-2wheeler)
-Reduce GST rate to 5%
-Allocate ~ Rs 1,000crs towards charging stations
11/n
Other initiatives:
-Tax exemptions & subsidies for EV manufacturers & consumers
-No license required to operate EV charging stations
-100% FDI allowed
-State govts also targeting individually to ramp up EV sales, check out the details here:
mercomindia.com
12/n
-Tax exemptions & subsidies for EV manufacturers & consumers
-No license required to operate EV charging stations
-100% FDI allowed
-State govts also targeting individually to ramp up EV sales, check out the details here:
mercomindia.com
12/n
Interesting EV component co's one might look at:
Minda Industries:
-Market leader in many auto-components
-Optimistic on 2-3wheeler EV demand & also launched products
-Did a tie-up with Friwo & will spend 1500crs+ in next ~3yrs to further grow its EV product portfolio
13/n
Minda Industries:
-Market leader in many auto-components
-Optimistic on 2-3wheeler EV demand & also launched products
-Did a tie-up with Friwo & will spend 1500crs+ in next ~3yrs to further grow its EV product portfolio
13/n
Varroc Engineering Ltd:
-Auto component co.
-Has own Motor-controllers, BMS tie-ups & onboard chargers
-Mngmt expects fast EV disruption in 2-3W & additional 500cr revenue from same.
Check more insights on the co. on here:
multipie.co
multipie.co
14/n
-Auto component co.
-Has own Motor-controllers, BMS tie-ups & onboard chargers
-Mngmt expects fast EV disruption in 2-3W & additional 500cr revenue from same.
Check more insights on the co. on here:
multipie.co
multipie.co
14/n
Exide Industries & Amara Raja: Both started investing in green technologies after govt. announced incentives
-Exide did JV with Leclanche SA & Amara Raja partnered with ISRO for manufacturing of Lion batteries
-Total Capex of both co’s expected in next ~3yrs is ~3,800crs+
15/n
-Exide did JV with Leclanche SA & Amara Raja partnered with ISRO for manufacturing of Lion batteries
-Total Capex of both co’s expected in next ~3yrs is ~3,800crs+
15/n
What are the other companies you might look at, to play out EV theme in India?
Let us know in the comments
Let us know in the comments
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