Auto component sector to see 9-11% revenue from EV parts by 2027: Crisil

This growth is expected to continue while the supply of parts for vehicles with an Internal Combustion Engine will simultaneously increase during the period

July 27, 2022

During FY22, the overall share of EV components in the sector stood at 1%

The revenue of Electric Vehicle (EV) components is expected to increase at a Compound Annual Growth Rate of around 76% to INR 72,500 crore in 2027

About 60% of this revenue is expected to come from the battery segment, and 15% each from drivetrains and electronics

90% of the EV component supplies will mostly be for Two-Wheelers (2Ws) and the Passenger Vehicle (PV) segments

India’s auto component industry is expected to witness 9-11% of its revenue from EV parts by 2027, driven by an increase in electrification, according to a report from Crisil.

This growth is expected to continue while the supply of parts for vehicles with an Internal Combustion Engine (ICE) will simultaneously increase during the period, it said.

During FY22, the overall share of EV components in the sector stood at 1%.

The revenue of EV components is expected to increase at a CAGR of around 76% to INR 72,500 crore in 2027 from last year’s INR 4,300 crore.

About 60% of this revenue is expected to come from the battery segment, 15% each from drivetrains and electronics. The report said that 90% of the EV component supplies will mostly be for 2Ws and the PV segments.

Auto component makers are presented with opportunities to diversify their revenue sources beyond ICE, by working with EV components such as batteries, drivetrains, and electronics among others.

Experts say that organisations are pouring money into the development of electric components, with established ICE Original Equipment Manufacturers (OEMs) and also new EV makers. However, improving the cost viability that EVs provide compared to their ICE counterparts, and increased demand for cleaner mobility will drive the transition to EVs.

2Ws and PVs are driving the EV transition, with an estimated penetration rate of 19% and 2.5% respectively, by FY27. The current rate of penetration for 2Ws is 2.5%, and for PVs, it’s 7%. 

Commercial vehicles, whose current penetration rate is 0.3%, will reach 3% by the said period.