While India deals with the second and devastating Covid-19 wave, her priorities are to strengthen medical infrastructure to provide immediate relief to fellow citizens. Repeated Covid waves have been responsible for disrupting the supply chain of not only medical but also many other industries.
The automotive industry also has been affected and these disruptions have exposed some gaping holes in the entire value chain of automotive component supplies. Let me try to take two examples to explain the situation.
The first example of the automotive industry comes from power-electronic component supply chain disruption. We are in a global shortage of electronic components such as semiconductors. Some reports suggest that it will take the entire F22 to overcome shortages and fulfill the pent up demand. As an industry, we import electronic goods worth Rupees 30000 Cr. per year.
Another example is from the bicycle or electric bicycle industry. Some essential components such as 7-speed gear, which mostly come from East Asian countries are in acute shortage and the waiting period of order fulfillment is a whopping 13 months, while all manufacturing runs at full capacity.
In both examples, our automotive, rather “electric vehicle supply chain is affected because of one simple reason. Dependence of component supply chain in imports, or we can simply say “import oriented” approach. Let me talk about the solution by breaking down it into 3 phases to extrapolate the electric vehicle supply chain outlook.
As we step into the new era of electric mobility, EV’s are more of assembly of electronic components and less and less mechanical parts. While we set the ambitious target of phase-out ICE vehicles and replacement with EV’s, our manufacturing strategy of making power electronic components should also be aligned. That change of approach of making power electronic parts locally will have multiplier effects. Not only EV adoption will have a boost, but also our import dependence will drastically reduce. With government initiatives, line PLI schemes give a good head start in some areas, but India needs it more.
Talking about the future outlook of EV’s supply chain, technology dependency is a short-term challenge to be dealt with. As EV’s are being opted by all types of mobility, whether it is macro or micro-mobility, whether it is 2wheeler, 3wheeler, or 4wheelers getting electrified, technology self-sufficiency will have a positive outlook on the supply chain. Let me take the example of a motor, which is technically the engine of an EV. Largely EVs require raw material such as rare earth magnets, which is again import-dependent raw material for India. Technology development in this area such as switched reluctance motors can be a strong alternative to BLDC motors. However, to be able to do so, the industry needs a short-term support system to develop local technology at a faster pace.
Skill workforce dependency
This area is less focused and less talked about, but once addressed, it will bring value to the entire ecosystem of the supply chain. Our nation needs to teach and train more to produce more. One such example I can quote is that we at Nexzu are collaborating with India’s leading universities to help them bring industry-relevant topics into their curriculum. This way we help create a larger pool of competent workforce.
If we address the improvement opportunities in the right way, our supply chain outlook will be bright and shiny.
By Rahul Shonak – Chief Operating Officer, Nexzu Mobility