Apart from technology progressing at a faster rate, everything associates with it or comes under its canopy of evolution gets a new upgrade.
This upgrade is mind-blowing in various aspects!
If asked, what and how would you see Indian technology in 5 years, my instant answer would be that ‘It would be 3 folds comparatively’.
This blog article would be a little different from the others.
There are certain sectors, which exhibit really fast growth in a decade’s time.
In the 1980-1990s, it was the manufacturing hubs, last decade it was tech, and maybe this decade also it will be tech, but there is additional one sector which I am betting quite heavily on which is called as EV or electric vehicle sector.
In this blog article, we will discuss everything about the EV sector.
Potential of Electric Vehicle sector
In order to understand the potential EV industry in generic terms, there are specific points that we need to consider.
So the first point is that are the external conditions conducive for the EV sector to grow?
What do I mean by that?
Let me take you back to the 70s when the development of computers happened, the cost used to be very high, right?
One MB of RAM used to cost an insane amount of money.
But as the industry progressed, the cost of those factors started going down.
Silicon Valley developed a lot of investment started pouring it into tech and computer-based companies, a bunch of positive external developments happened which accelerated the technology and the software industry.
In the same way, in the 2020s, you need to ask yourself the question that how do I see this industry getting help from external factors?
There are a lot of positive external factors at play here.
A majority of the corporations are becoming more socially and sustainability-focused.
They are following something called ESG norms.
A majority of the fortune 500 companies are becoming ESG, which is environmental, social and governance focus.
So, they want to invest in initiatives that promote the sustainability of the world.
We are aware of the fact that non-renewable sources of energy, for instance, crude, wood, etc, are not sustainable, they cause wreckage to the environment.
Therefore, companies, governments, even multilateral organizations, are putting in a lot of resources in terms of exploring alternate sources of energy and promoting sources that do not cause pollution.
There is a lot of push in terms of developing the entire mobility system.
This is not completely new because you might have recently seen even in your city that e rickshaws have become very big and this is a new development.
This has happened in the last five to seven years that the E rickshaw industry in India has started to become really big.
It has started replacing a lot of conventional sources of transportation like tempos, autos, etc. and now people are adopting EVs.
Favourable growth of this sector
Sure, that this adoption is at a much slower pace but this is definitely the future.
Even global governments are not lagging to contribute their part, it’s taking care of policies that are somewhat promoting the EV market.
In the European Union EU, they have started leaving a lot of taxes on conventional sources of transportation, i.e if your vehicle is extremely heavy, then you will have to levy heavy taxes.
Also, the trend perspectives like crude and brent prices, have been very supportive to promote the EV sector.
Even if initially, the aspects are not supportive of EV policies they are definitely getting a lot of reinforcement in the form of external support, which forms the right set of conditions for it to grow.
In order to clearly assess the potential of the industry, it is also very important to assess whether or not any industry can grow profitably right, this is very important point because there are a lot of products and industries where growth happens, but the growth does not happen in a profitable manner.
Here springs the next question…
Would the EV industry fall in such a category?
Ummmmm…….the answer is no.
Let’s understand why so.
There is mass adoption of electric vehicles yet electric bikes or electric scooters or electric cars is already happening at scale.
Now here is a study that was done by Niti aayog which published a report called ‘India’s electronic mobility transformation’.
According to the report, it estimates that by the year 2030, the EV sales penetration in India would stand at 70% for commercial cars 30% for private cars 40% for buses and 80% for two and three-wheelers right.
This gives a clear estimation of, which direction people are going to buy their vehicles?
And most importantly are they going to continue buying their traditional vehicles or would they shift to these new-age vehicles which are called as EV?
With such serious questions springing up, it is crystal clear that the shift is clearly happening and Niti aayog has categorically pinned that down.
There was another study that was published by auto news in Europe and it categorically says that By the mid-decade, EV sector profitability will match internal combustion engine-based vehicles.
Now, this is a very big statement to make because so far for the last 120 years we have been using conventional sources of energy to drive automobiles as we say even now, right!
The profitability over these 120 years since the invention happened, had improved in these icy engines, internal combustion engine-based leakers which are traditional vehicles.
The profitability has gone up because of the fact that engine efficiency improved manufacturing efficiency improved bunch of other efficiencies came in so the same life cycle will payout for EBS (E-business suits) also.
Now, this is a very big statement, which means by the mid-decade, the profitability of EBS will match that of internal combustion engine-based vehicles.
Also moving forward, by the year 2025 onwards, it would only be a matter of time that EBS will become more and more cost-efficient even their battery lives will improve new developments will happen new research and development budgets will chip in.
Now, since the growth potential of EV industry is massive people are going to buy an EV’s and companies are going to get more and more efficient in terms of driving their profitability.
So, it is just a matter of time that India will benefit from this revolution.
Scope in India
Let us analyse the EV industry in India and where does EV industry stand and where can it go from here on.
EV as a whole can be categorized into three different sub-parts.
First let’s have a look at the brands that actually sell right, which involve putting their logo and stickers on different things.
For instance, you have two-wheelers and four-wheelers.
The companies which are involved in selling the brands are supporting and giving you the final product.
So that is the first category.
The second category would be called OEMs or original equipment manufacturers.
In order to build an electronic vehicle, you would need a bunch of things, an engine, a steering wheel, etc.
OEM Original Equipment Manufacturers are the ones who actually build these individual parts, which are eventually assembled by someone else.
And then brands put their stickers and sell them.
Therefore, the second category is called OEMs.
And third is the overall infrastructure.
Once you have an EV in your hands, what are you going to do with it, you have to go to its charging port to get the charging done you need some kind of permit.
There’s an entire infrastructure that should be in place.
This is exactly where you can bifurcate the EV industry.
Investment scope in the industry will be continued in the next blog…
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