Auto Component Industry To See 9-11% Of Revenue From EV Parts By 2027: Crisil Report

Auto component industry is expected to see 9-11% of its revenue coming from electric vehicle parts by 2027 amid increasing electrification, according to Crisil.

This growth will come even as the supply of parts for the conventional internal combustion engine-driven vehicles will also grow during the period, it said.

EV components' share in the sector's overall revenue during last fiscal stood at a meagre 1%.

Revenue of the electric vehicle components is likely to rev up at a compound annual growth rate of around 76 per cent to Rs 72,500 crore in fiscal 2027 from Rs 4,300 crore last fiscal, it said.

As much as 60% of this revenue is expected to come from the battery segment and 15 per cent each from drivetrains and electronics, with 90% of the EV component supplies likely to be for two-wheelers and PV (passenger vehicle) segments, it forecast.

An analysis of 220 manufacturers, which account for a-third of the auto components market, indicates the transition to EVs will create both opportunities and challenges for domestic auto component makers, it said.

EV components such as batteries, drivetrains, electronics and others present an opportunity for auto component makers to diversify their revenue base beyond internal combustion engine vehicles.

"Companies are already investing in developing electric components, both with established ICE original equipment manufacturers and with new-age, pureplay EV makers," said Naveen Vaidyanathan, director at Crisil Ratings.

Improving cost viability of EVs versus ICE vehicles, and rising consumer demand for cleaner mobility will drive the transition to EVs, according to Pushan Sharma, director at CRISIL Ratings.

Among the key auto segments, two-wheelers and passenger vehicles are seen driving the transition, with their penetration rising to 19% (from around 2.5% currently) and 7% (from less than 1% currently), respectively, over the next five fiscals, he said.

Commercial vehicles, however, will see far lower penetration at around 3% (0.3% currently) because of unfavourable economics, Sharma added.