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EV powertrain retrofitment market gains traction with influx of organised players

While an average electric four-wheeler costs about Rs 15 lakh in India, retrofitting an existing old vehicle costs the owner of that vehicle only about Rs 4-5 lakh, as per estimates by Transparency Market Research

July 30, 2022 / 07:27 PM IST

Sachin Khapare, 42, a pharmaceutical company representative based in Mumbai, was planning to upgrade from his 15-year Splendor Plus motorcycle to a brand new electric bike. But instead of going for the Revolt-branded e-bike for Rs 155,000, the only option at that time, he decided to keep his existing bike and get the Internal Combustion Engine (ICE) replaced with an electric vehicle powertrain kit costing Rs. 105,000 (including registration fees and a Goods and Services Tax rate of 18%).

“I was actually looking for an electric bike but had very limited options. Also, since the maintenance costs of my Splendor Plus is pretty low, I didn’t want to part with it. So getting it retrofitted with an EV kit by a recognised player was the best way out. The whole process of powertrain conversion took just 7 days and I now feel elated that I can use my Splendor  without emitting any Co2 and traverse up to 125kms in a single charge,” Khapare told Moneycontrol.

While the electrification of powertrains is gaining eminence worldwide, high purchasing prices of brand new electric vehicles are also compelling certain sections of buyers to shun a brand new model and instead get their old vehicles retrofitted with electric kits and other components, thanks to the mushrooming of specialist players offering such solutions.

Industry analysts reckon that the rising trend for electrification of vehicles due to adoption of stringent automotive emission norms, increasing fuel prices, government incentives and lower operating costs of EVs has simultaneously led to rapid adoption of automotive retrofit electric vehicle powertrains in vehicle.

“In terms of cost-effectiveness the retrofitted vehicles are an inexpensive option when compared with new vehicles. People requiring vehicle for short commuting purposes, city usage and occasional use are more likely to opt for ‘greener’ options and this can be a latent trend for customers switching to retrofit options,” said Nikhil Kaitwade, Associate Vice President (AVP) – Market Research at Future Market Insights.

Dissecting the market 

According to a research report titled India Retrofit Electric Vehicle Powertrain Market by Transparency Market Research, the automotive retrofit electric vehicle powertrain globally was pegged at $58.59 billion during 2021 and the Asia Pacific market accounted for 65.55% of it.

The same report also claimed that the global market for EV powertrain retrofitment would expand at a Compound Annual Growth Rate (CAGR) of 7.64% in 2022-26, reaching $84.66 billion.

Global EV Powertrain Market

In India, the market is yet to realise its commercial potential and is currently at a nascent stage. As per Transparency Market Research, during 2021, around 975,000 vehicles inclusive of two wheelers, three wheelers, and four wheelers underwent retro-fitment and the numbers are likely to increase to 2,200,000 units in 2026.

The Indian EV Powertrain Retrofitment Market, which was worth $ 2.14 billion and is witnessing a CAGR of 13.27% for the next five years (2022-26) to reach $ 3.99 billion by 2026, the same report said.

Indian EV Powertrain Retrofitment market

Avinash Singh, Associate Vice President, Transparency Market Research, told Moneycontrol:  “Prominent trends in automotive retrofit electric vehicle powertrain market in India include rising retrofitting of passenger vehicles, three wheelers and commercial vehicles which are on an average 10 years in age or older, increasing adoption of integrated kits and entry of many startups offering retrofitment electric powertrains and retrofitting to the owners of old ICE engine vehicles.”

According to Transparency Market Research, while the market share for organised players is increasing in the country from 15-20% in 2021 to 30-35% by 2026, that of unorganised players is decreasing from 80-85% to 65-70% during the same period.

This is largely because players currently spread under the unorganised sector are gaining market share in India and this shift from unorganised to organised market by such entities is responsible for the comparatively higher share of the organised sector in 2026.

“For now, majority of players in EV retrofitment market are start-ups, with a few leading auto component manufacturers. EV retrofitment in the Indian market is fragmented when compared to the other matured economies. With some boost from state governments (example- Delhi and Andhra Pradesh retrofitment guidelines), the start-ups can gain momentum and focus on the consumers willing to swap their vehicles to EVs than scrapping them," said Saket Mehra, Partner and Auto Sector Leader, Grant Thornton Bharat.

Apart from batteries, an EV kit contains motors, traction controller, onboard charger and ancillary equipment. However, the kinds of EV kits vary from company to company and may be different for different vehicles.

The average cost of a kit may vary from Rs. 30,000 for 2Ws, north of Rs. 50,000 for 3Ws and can go up to Rs. 5-8 lakh for 4Ws and light commercial vehicles, according to Grant Thornton Bharat.

While an average electric four-wheeler costs about Rs. 15 lakh in India, retrofitting an existing old vehicle costs the owner of that vehicle only about Rs. 4-5 lakh, as per  estimates by Transparency Market Research.

EV Powertrain Vehiclewise breakup

Ebullient market

Globally, there are multiple players active in the market that are typically targeting passenger cars and two-wheeler segments. They include Green Shed Conversions, EV West, Make Mine Electric, EV Source, Transition-One, Green Motors Inc., Eco Electric Cars, BEDEO, and RETRO-EV.

In India, too, there are a handful of specialist players like Folks Motor, E-Trio, GoGoA1, LoopMoto, RACEnergy, Northway Motorsport, Omega Seiki Mobility (OSM), Cell Propulsion, Volta Automotive, Green Tiger, EV Retron Energies, etc., to name a few. Within that, only two or three players are certified by the Automotive Research Association of India (ARAI).

OSM, which is establishing a retrofit facility near Chandigarh at an investment of US$ 25 million, is looking to deploy 2,000, 5,000 and 10,000 EV Kits in the first, second and third year of operation respectively.  The newly floated subsidiary-- OSM Retro--will be first offering EV Kits starting from 1.0-1.5 ton trucks to 3.5-6.5 ton trucks and then will then be catering to minibuses.

Uday Narang, OSM founder and Chairman, told “Once we prove OSM retrofit technology to the large fleet owners and our logistics partners in the middle and last mile, our projected order book will be over 30,000 vehicles for buses and trucks in the retrofit space in the first year itself.  Also, we are confident that our (logistics) partner Porter which had thousands of trucks plying in the country, all having ICE engine, will come aboard to convert their fleets to EV.”

Similarly, GoGoA1, a homegrown start-up that specialises in providing electric- and solar-powered vehicles and their components, has set up a manufacturing facility with an in-house research and development (R&D) unit at Ahmednagar, Maharashtra where it produce kits, motors, throttles etc. for two-wheeler retrofitment.

The company will also be exploring other segments like four-wheelers in the next phase.

“We intend to reach out to all the states and to be a part of government of India’s initiative of having at least 30% of EV vehicles on the road. Since we are in the retrofit industry, we are looking at increasing the life of motorcycles which are over 15 years old and on the verge of being scrapped,” said Shirkant Shinde, founder of GoGoA1.

On similar lines, Bangalore-based start-up Green Tiger Mobility Pvt. Limited, claimed that it has developed its own EV kit which will add a new electric powertrain including motor, battery pack and vehicle control unit while retaining original ICE and its powertrain. The company has designed all components in-house with five filed patents.

Ashish Dokania, founder of Green Tiger, said: “The modified 2Ws offer following benefits of an EV, while retaining familiarity of ICE 2W, thereby making the vehicle cheaper to ride, efficient, convenient and virtually pollution-free.”

Dokania added:  “Our vision is to cater this solution to at least 1+ crore vehicles over the period of next 5-6 years with a market share of 5-7% of the retrofit market in 2W space.”

Transparency Market Research report also claimed that that retrofitting is anticipated to create a medium-scale impact on the sales of new electric vehicles.

The research firm claims that retrofitting of old commercial vehicles with electric powertrains is predicted to create a significant impact on the sales of new commercial vehicles in India considering the fact that the market for electric commercial vehicles in India is still in its infancy.

Interestingly, none of the traditional original equipment manufacturers like Tata Motors, Ashok Leyland, VE Commercial Vehicles , etc., were willing to offer any comments on the impact of retrofitment on their new electric vehicle sales.

Stumbling blocks

While opportunities are immense for EV powertrain retrofitment players, Industry analysts reckon that the higher cost of retrofit electric powertrains, falling prices of electric batteries leading to a fall in the prices of new electric vehicles, range anxiety and lack of charging infrastructure are expected to pose major challenges to the growth of global automotive retrofit electric vehicle powertrain market, including in India.

“EV retrofit market is currently into introduction phase of the market, it faces challenges from various facets of market including customers, component suppliers, assembly service providers and certification agencies. Government of various countries are yet to lay firm regulations and norms with regards to conversion kit quality, standards and approvals. This can pose a risk of poor quality kits getting into aftermarket and in-turn negatively impact on consumer acceptance,” maintains Kaitwade of Future Market Insights.

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Avishek Banerjee