Covid-19 to impact electric vehicle market?

electric car

Electric vehicles market in India may experience a shift as consumers seek affordable products amid COVID-19, and it could make manufacturers resume production for conventional vehicles, according to a report.

The report – Towards a Clean Energy Economy: Post-COVID-19 Opportunities in India’s Energy and Mobility Sectors – is prepared by government think tank Niti Aayog and Rocky Mountain Institute.

It also said there may be delays in electric vehicles (EV) production as manufacturers focus on reviving demand and producing BS-VI vehicles, while curbs on imports of Chinese components may lead to disruptions in EV manufacturing.

“Auto sales could decrease by as much as 45 per cent in the financial year 2020–21. EV production could be affected in the short term due to lower demand and supply-chain disruptions with BNEF estimating an 18 per cent decrease in global EV sales in 2020.

“The EV market may experience other shifts. For example, there is an expectation of demand for more affordable EV products. This potential shift in consumer preferences may affect manufacturers’ investment and production decisions. Ultimately, resuming production levels for conventional vehicles and EVs will depend on demand revival, supply-chain reactivation, and access to the labour force,” the report said.

Lower disposable incomes and a tendency towards cash saving will lead to reduced demand for EV in the short term, the report said, adding “some OEMs’ customers are pushing back their EV business plans by two or more years”.

On the impact on EV supply chains, the report said, “There may be delays in EV production as manufacturers focus on reviving demand and producing BS-VI vehicles. Curbs on imports of Chinese components may lead to disruptions in EV manufacturing”.

The report also highlighted the consequences of policy changes stating “many state EV policies and e-bus projects may be delayed due to other priorities and social-distancing challenges”.

Why India’s EV dream facing deferments, delays & die-offs

Stressing that the emerging situation and challenges in the context of COVID-19 has and will continue to disrupt business as usual in the mobility sector, the report said the impact of the pandemic on passenger and freight segments, as well as the auto industry, raise several questions.

These include whether the overall demand for mobility will fall in the short to medium-term, will ridership of public and shared transport modes decline and will private modes be preferred?

It also pondered whether lack of auto sales will cause a severe hit to the supply chain and a growing call for self-sufficiency lead to a push to create local supply chains.

“Will the Prime Minister’s call for domestic manufacturing and localisation attract investments at a time when a recession is looming? Would the new mobility ecosystem propelled by startups be able to survive the crisis,” it wondered.

Source: PTI

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