EV startups will disrupt automotive market: Amitabh Kant, G20 Sherpa

G20 Sherpa and former NITI Aayog CEO Amitabh Kant (Illustration: Moneycontrol)

Electric vehicle startups run by young entrepreneurs will disrupt India’s automotive industry ecosystem, a top government official said, disagreeing with recent claims that their products are questionable.

“If you are not going to change, the world is not going to wait for you. Young entrepreneurs will disrupt the market and everyone else has to follow,” Amitabh Kant, G20 Sherpa and former CEO of Niti Aayog, said at the 62nd annual convention of the Automotive Component Manufacturers Association (ACMA) in New Delhi.

“The market for electrics is going to explode in the days to come, whether you like it or not. My view is that India has to emerge as a leader if all of you take the lead because this disruption is happening all over the world,” added Kant.

Kant exhorted the auto industry to reinvent itself as the country transits towards e-mobility, saying a revolution is knocking on our doors and India’s focus has to be on shared, connected, and electric mobility.

Citing the example of Tesla, whose valuation is equal to the total valuation of other leading auto companies, Kant maintained that it is quite possible for some startups from India to shake up the entire traditional market for automobiles that run on internal combustion engines.

Tesla had a market capitalisation of over $915 billion as of September 14 and was the fifth-biggest US public company.

Gaining ground

Kant lauded startups such as Ola , Ather, Revolt, Okinawa, Tork, and Log9 Materials, which are focusing on electric vehicles and EV solutions.

A big proponent of products developed in India for the global markets, Kant said disruption in the auto market is inevitable, but it will make EVs affordable, accessible and durable and citizens will embrace it wholeheartedly.

He opined that the transition to electric mobility is gaining ground because the cost of a battery, which is 40-45 percent of the total cost of an EV, has declined over the past 5-6 years and will come down further to less than $100 a KWH.

“When it happens, then the initial cost of ownership will make it cheaper than combustion vehicles even without FAME subsidies,” Kant said. FAME refers to an incentive scheme called Faster Adoption and Manufacturing of (Hybrid &) Electric vehicles in India.

He said India’s automotive industry should target 100 percent electrification in the two-wheeler and three-wheeler segments by 2026.

“India’s electrification journey is about two-wheelers and three-wheelers because 80 percent of sales is really about two- and three-wheelers. We need to target 100 percent electrification in the next four years in two- and three-wheelers,” he said.

Kant said Rs 20 lakh crore of investments would be needed to develop EV infrastructure and various proposals on multilateral financing are under discussion with the World Bank.

Sales of new electric two-wheelers and three-wheelers are expected to grow by 50 percent and 70 percent, respectively, by the end of the decade, according to a report by ACMA and McKinsey.

While lauding the performance of the auto component industry, Kant said there are many milestones to cross before India can become a $30 trillion economy by 2047.

“India is growing rapidly and accelerating at a pace of growth of 9-10 percent per annum for three decades or more and (this is) much like what Japan did in the 50s or much later Korea or Singapore did in the 80s or China did in recent times,” Kant said. “So if you accelerate the pace of growth at that level, you are actually aiming for $30 trillion economy by the time the nation turns 100 in 2047 and this cannot be done without the automotive component industry, which is the key driver of the growth story.”