Biggest Capex pushes coming in for the Indian automobile industry as industry players plan to spend huge amounts in the EV arena in their bid to switch towards cleaner mobility solutions. Stakeholders including major players or startups, as well as ancillary suppliers, are expected to be spend a combined amount of Rs 70,630 crore in the next 5-years to either expand their developments in the EV segment or setup up their presence in it.
In line with the government’s focus on e-mobility solutions, expectations are high to launch a minimum of 25 EVs (new or the electrified versions of the existing ones) that would run on internal combustion engines. This would mean getting more investors, more start-ups coming into play, and transforming the entire auto industry.
Pawan Goenka, chairperson of the government’s Steering Committee for Advancing Local Value Add and Exports, said that the current spate of investments is the culmination of several years of efforts, and production linked incentives (PLI) have given it a much-needed impetus.
The central government aims to reduce the country’s dependency on non-renewable resources, and therefore there is a strong emphasis on building an electric led environment by 2030 which comprises at least 30 percent of private EVs, 70 percent of commercial EVs, and 80 percent of two- and three-wheeled electric vehicles.
Three top players who are leading the EV-related CAPEX include Tata Motors and its subsidiaries, Suzuki Motor Corp., and Hyundia Motor India. Startups, as well as the incumbent two-wheeler manufacturers, are also nowhere behind. TVS Motor is at the forefront followed by Omega Seiki Mobility, Okinawa Autotech, Ather Energy, and others are also making developments for infusion of capital in order to come up as the changemakers.
Shamsher Dewan, SVP, and group head, ICRA said, “Typically the auto industry incurs a Capex of 8-10 percent of its annual revenue. This time, it’s going to be phased out and will be largely driven by passenger vehicle makers.”
April 2020 witnessed the last big Capex in India’s automobile sector with a combined Rs 40,000 crore from Bharat Stage IV to VI emissions norms and now that the industry is no more relying on the traditional engine parts but has switched the electric way.