Encouraged by demand, EV makers line up investment, increase capacity

Tamil Nadu leads among the states, expects investment doubling to 40,000 crore in 2 years

Electric vehicle (EV) makers in India (including start-ups and conventional automakers) have committed over Rs 9,000 crore in the past one year as they seek to ride on the opportunity thrown open by electric mobility. This doesn’t include investments made by component suppliers and battery manufacturers.

An independent study by CEEW Centre for Energy Finance estimates the EV market in India to be a $206-billion opportunity by 2030, provided India maintains steady progress to meet its ambitious 2030 target. This will require a cumulative investment of over $180 billion in vehicle production and charging infrastructure.

Not surprisingly, among these, the maximum investment has gone into creating capacities for the electric two-wheelers, followed by three-wheelers and light vehicles used for last-mile connectivity. The confidence stems from growing demand.

Albeit on a low base, manufacturers of most electric two-wheelers, including Hero Electric, Okinawa Autotech, Ather Energy, Ampere Vehicles, Bajaj Auto, TVS Motor, among others, have seen demand rise sharply in the first five months of the current year.

Encouraged by the demand and projections, EV makers are ramping up capacity.

Nagesh Basavanhalli, managing director (MD) and group chief executive officer, Greaves Cotton, that sells electric two-wheelers and three-wheelers under the Ampere brand, said his firm has sold close to 100,000 electric two- and three-wheelers and is expanding capacity at Ranipet in Tamil Nadu (TN).

"It will have the capacity to roll out 1 million units by the end of this financial year. The demand has outstripped supply,” said Basavanhalli.  

Okinawa Autotech, too, is expanding capacity to meet growing demand, said Jeetender Sharma, MD and founder, Okinawa Autotech, which sells the i-Praise +  and the Praise Pro brand of electric scooters. The company produces 90,000 units in a single shift at its Alwar factory, which can be doubled with an additional shift, he said. It is also investing Rs 250 crore in a bigger factory in Bhiwadi, which will have the capacity to roll out 1 million units per annum.

“We have been witnessing a surge in sales on account of rising fuel prices, as well as the supportive policies from several state governments inducing customers to opt for electric mobility. Our monthly sales are now averaging to more than 5,000 units,” said Sharma.

India’s tryst with EVs is more than two decades old. It has, however, failed to move the needle in terms of a wider adoption and hence, investments have been few and far between. It is only recently, following concerted efforts by the Centre and state governments and a policy push, that EVs have started whetting investor appetite.

The market has seen a flurry of new launches. Owing to a high price barrier, charging infra issues, among other factors, electric cars remain out of a common buyer’s reach and will remain so in the foreseeable future. India’s EV fortunes, therefore, will be riding on electric two-wheelers.

Sohinder Gill, president, Society of Manufacturers of Electric Vehicles, the apex body representing the interests of EV makers, says a total of Rs 3,612 crore has been raised by manufacturers to fund their EV plans. This includes Rs 2,132 crore by Ola Electric, Rs 701 crore by Hero MotoCorp-backed Ather Energy, Rs 380 crore by Hero Electric, the rest by Revolt Motors, Pure EV, and Ampere Vehicles.

The EV evolution has led to healthy competition among states for investment. TN and Karnataka are turning out to be favoured investment destinations. Based on estimates, TN is set to see investment between Rs 15,000 crore and Rs 20,000 crore in the entire EV space, including original equipment manufacturers, battery makers - a major part of it coming from electric two-wheelers.

“Our EV policy is going to encourage manufacturing, coupled with skilled manpower,” said TN Industries Secretary N Muruganandam. The state is likely to see doubling of investments in the EV segment to Rs 40,000 crore in the next two years.

Karnataka is not far behind in the EV race. The state had announced investments to the tune of Rs 23,000 crore in the sector last year. Of this, Rs 20,000 crore was committed by Elest to set up a Rs 14,255-crore EV manufacturing unit and Rs 6,339 crore for a lithium ion cell and battery manufacturing unit.

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