India’s automotive sector is gearing up for a major electric transformation over the next two decades. However, compared to other countries, India’s adoption of EVs and innovation in electric mobility technology is still nascent. Yet, some players in the EV industry are already preparing to improve their competitiveness in anticipation of the expected growth. These players represent various sub-sectors within the EV landscape— including power, renewable, automotive, auto components, battery storage systems, telematics, power electronic industries.
A report by the World Resources Institute has analysed the competitive strategy of 31 such players using a framework called the ‘Four Dimensions of Competitive Scope’. They use this research to identify and recommend 7policy ideas that can accelerate the evolution of the electric mobility landscape in India.
What strategic moves players are making to gear up for the electric revolution in India
- Forty-two per cent of the players identified in this research are primarily increasing their competitiveness by either diversifying into new industries or adapting within their parent industry. For example, RR Global’s core business is electrical equipment manufacturing, which shared technical aspects with EV technologies. Therefore, it is moving into the electric vehicle industry by manufacturing electric two-wheelers under a new brand ‘BGauss’. Similarly, Hindustan Petroleum Corporation Ltd. and National Thermal Power Corporation are expanding into offering battery charging solutions. In other cases, players whose products could be substituted with EVs are investing in the next generation of products. Examples include Bajaj partnering with an Australia manufacturer to co-develop electric two-wheelers, or Exide venturing into the manufacturing of lithium-ion batteries.
- Another 42 per cent are either offering new products or significantly improved versions of existing ones. These players generally produce battery packs and re-energising systems, and have a good footing in their parent industry. For example, Bharat Petroleum has partnered with Kinetic Green, a three-wheeler maker, to set up battery swapping stations.
- Ten per cent of the players are integrating or unbundling their value activities. For Example, NTPC is partnering with ride-share companies, presumably the early adopters of EVs. Tata Power is tying up with oil retailers to take advantage of the pan-India outlets to reach customers.
- Six per cent are choosing to either move operations to a new location or carve out joint ventures and acquire other players to access innovation in EV technology. For example, auto-makers and auto-component makers are forming joint ventures and acquiring offshore companies to gain access to newer and advanced technology. Oil and power companies are using their existing pan-India presence to enter the charging business.
The path to facilitative policy
Overall, the analysis reveals that majority players are focusing on expanding into new industries pertinent to electric mobility such as charging infrastructure, battery innovation, electric two-wheeler manufacturing, etc. Further, players are collaborating with other players to outsource manufacturing of products. Therefore, policies need to be designed to encourage the expansion of related industries into the electric mobility domain, as well as incentivizing in-house innovation.
Policy idea 1: State governments without auto-clusters could focus on inviting firms from industries ‘related’ to electric mobility. They can invite international corporations and institutions to set up Overseas Development Centres in states, with lucrative demand-side incentives to drive volumes.
Policy idea 2: State and/or central government can institute a fund for aggressively driving experimental projects related to EVs and allied products.
Policy idea 3: Encourage fund tie-ups between industry and academia such as NITs, IIMs, IITs and state universities.
Policy idea 4: Design incentive schemes similar to FAME-2 for innovative EV products developed by companies in India.
Policy idea 5: Design a skilling strategy that incentivises movement of talented workforce into work opportunities across the value chain of EVs. This can be led by the Ministry of Skill Development and Auto-component Makers Association (ACMA), along with councils of power, renewable etc.
Policy idea 6: New research shows that the carbon footprint fo batteries made using recycled raw material from other batteries is 38% les than those made with virgin raw material. Therefore, the National Battery Storage Mission, along with central and state government agencies, could create a country-wide battery labeling program that would guide consumers on how to dispose retired batteries. They could also create a battery recycling and urban mining firm, which could serve as an extension to KABIL. Policy idea 7: State Governments could assess the network of informal players in the business of recycles lead acid batteries and devise means to use their operations in recycling value chain on lithium-ion batteries.