What is EV Ancillary, and how will it support India's EV market?

In India, there is a growing market for EV ancillary that has a huge amount of potential. The ancillary sector becomes extremely important as India strives to become a significant export base for electric vehicles. It will be critical to watch how the government and EV manufacturers make the most out of them to make the ancillary market—which can be both organized and unorganized—a successful business area that will support the local EV market. This article describes what is EV ancillary and their critical importance in supporting the Indian EV market.

What is EV ancillary?

Electric vehicle ancillary describes the various components and parts used in the development of electric vehicles. Almost all parts, including electronic ones, are currently imported from either China or European countries.

Original equipment manufacturers (OEMs) are supported by the organized EV ancillary sector, which also trades in expensive instruments. Such companies have become widely established in cities like Chennai, Noida, Bangalore, etc.

The unorganized sector offers the aftermarket low-cost tools and mechanical components required for electric bikes, electric scooters, e-buses, and other electric vehicles. It should be noted that citing attractive business opportunities, many EV manufacturers are shifting their focus to the manufacturing of parts and components for electric vehicles. The auto and EV ancillary industry in India is anticipated to grow to become the third-largest in the world by 2027.

How EV ancillary sector can support the growing EV market in India?

The EV ancillary sector holds massive potential as India is seeing a surge of EV manufacturers in the country. Many manufacturers of electric vehicles have to rely on imports of critical components and materials to make their EVs. In addition, the covid pandemic and subsequent lockdown have put huge stress on the supply chain network due to which it became hard to source components and parts. 

Additionally, due to disruptions in the supply chain as a result of the pandemic, EV manufacturers are also experiencing an increase in the cost of crucial components. As a result, both consumers and manufacturers have been harmed by the rising cost of EVs.

Component manufacturers for ICE vehicles may soon shift their concentration to developing EV ancillary or accessories when clutches, radiators, and gears become outdated. India needs both manpower and skill in the sector to produce EV ancillary such as electric motors, batteries, inverters, microprocessors, etc. Because the technology is new, EV makers must educate young people who want to work in the EV ancillary sector. India needs to make significant investments in the EV ancillary sector if it wants to take the lead in the global EV market and create critical components for both the domestic and international markets.

Mostly, microcontrollers, batteries and Battery Management System (BMS), and motors are considered typical EV ancillaries for which EV makers have to mainly rely on exports. To make domestic EV ancillary lucrative and sustainable, India needs to promote local manufacturing of EV parts and components. “Make In India” and other government incentives schemes are of vital importance for the EV ancillary sector. 

The market for EV components in India, which is currently valued at about $550 million, is anticipated to expand at a CAGR of 22.1% between 2022 and 2030 as the nation's EV production booms. India will require a significant amount of workforce in the EV ancillary sector by 2030 that will serve both manufacturers and service providers. According to experts, the country can benefit from a significant increase in employment prospects due to the EV ancillary sector, but sustainability requires the development of a strong EV ecosystem.

EV manufacturers like AMO Electric Bikes have laid out ambitious plans to produce critical infrastructure and EV ancillary for their electric scooty and e bikes in India. The Noida-based company has hired experienced professionals to chalk out plans for making EV ancillary. 

It will be interesting to see how India performs with domestic production of EV ancillary that is seeing a good scope for the domestic EV market. 

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