Driving Self-Reliance - Localizing EV Components in India

Comparison of EV and ICE components

The auto component sector, a longstanding pillar of India’s manufacturing and export strength, is navigating rapid transformation with the rise of EVs. Traditional manufacturers are adapting quickly to evolving OEM demands as value chains shift to support new technologies. Unlike ICE vehicles, EVs rely on a different architecture, with high-cost components like the battery pack, BMS, electric motor, and power electronics—most of which are still import-dependent. While parts like the chassis and body tap into existing supply chains, EV-specific technologies and infrastructure, such as charging systems, call for new manufacturing capabilities and deeper domestic integration (Exhibit 1).

Exhibit 1: EV vs ICE components

Market opportunity

In FY24, EV components reached US$ 4B, reflecting their growing share in the auto component market. By FY30, the total market is projected to hit US$ 206B, with EVs contributing over 22%, and charging equipment alone comprising 10% (Exhibit 2). As EVs age and batteries approach the end of their 5–6-year shelf life, the aftermarket for replacements is expected to grow, though current demand remains low due to warranty coverage.

Exhibit 2: Auto component and EV-auto component opportunity size

Yet despite this opportunity, India continues to depend heavily on imports for key components such as semiconductors, BMS, motors, and battery cells. This leaves OEMs vulnerable to global supply disruptions and pricing volatility. Localization is therefore a strategic necessity. Components such as BMS and power electronics offer meaningful localization potential, while others like battery cells and electric motors remain more constrained - though this may shift with changing geopolitical dynamics, China+1 strategies, and targeted investments (Exhibit 3).

Exhibit 3: List of all EV components

Electric motors, for instance, are largely import-dependent due to the lack of local sources for rare earth magnets, with supplies mainly coming from China and Japan. Similarly, power electronics - which involve technology-intensive manufacturing and high capital investments - are currently sourced from China, though localization efforts have begun, few examples of which are discussed below. (Exhibit 4).

Exhibit 4: EV components localization potential

Meanwhile, components like HVAC systems, control units, and lighting have achieved moderate localization. Indian manufacturers are well-positioned in these categories, although some subcomponents are still imported. Initiatives like Valeo India's expansion of its facilities in Pune and Sanand are aimed at boosting local production of BMS, lighting systems, thermal components, and powertrains - signifying an encouraging step forward (Exhibit 5).

Exhibit 5: Investments and initiatives by players to localize the supply chain

Nonetheless, battery cells remain a major bottleneck. Despite rising investments, India's reliance on imported battery cells underscores the additional efforts required to build a resilient and self-reliant EV component ecosystem.

In conclusion, while localization of EV components in India presents challenges - particularly for high-tech elements like battery cells and power electronics - the opportunity is undeniable. A concerted push by industry stakeholders, supported by policy direction and strategic investments, can help reduce external dependencies and build a more self-reliant, future-ready auto component ecosystem.

For a deeper dive in the EV component landscape in India, refer to the full report – Electrify30: The Future of Mobility by Praxis Global Alliance

Driving Self-Reliance - Localizing EV Components in India

Driving Self-Reliance - Localizing EV Components in India

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