Electric Vehicles - Sector Update - Nov 17

Batlivala & Karani
Sec tor Updat e 30 November 2017
Auto – Electric Vehicles

Exciting times ahead for Electric Vehicles
Annamalai Jayaraj Karthik Krishnan

Research Analyst Research Analyst
[email protected] [email protected]
+91-44-6547 4401 +91-44-6547 4403
B&K R esearch November 2017
Index.................................................................................. Page No.

Executive Summary..................................................................................................... 3
How to play the theme.................................................................................................. 7
Electric Vehicles............................................................................................................ 8
Global EV market....................................................................................................... 10
Indian EV market........................................................................................................17
Indian Automotive Market....................................................................................17
Incentives & Initiatives in India for EVs �� 18
Charging infrastructure in India......................................................................... 19
Potential EV path in India................................................................................... 20
Status of auto OEMs under our coverage �� 25
Impact of EVs on auto component companies �� 26
Implication for other sectors..................................................................................31
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Executive summary
Exciting times ahead for Electric Vehicles
Global automotive industry is on the verge of disruption. Electrification, connectivity,
shared mobility and autonomous driving is revolutionising automotive industry globally.
Though, Electric Vehicles (EV) have been in the global market for last many years,
definitive interest in EVs have sparked with the rise of Tesla Motors. Tesla is credited with
proving that EV can be compelling and reliable form of personal mobility in a desirable
package with capabilities on par or superior to those of comparable premium segment
internal combustion engine (ICE) powered vehicles.
Global EV market: Poised for strong growth

Out of 92 mn light vehicles sold in 2016, Electric Vehicles is ~1%.
Stricter Emission regulation, drop in Lithium ion battery (LiB) cost, widely available
charging infrastructure and increasing customer acceptance is expected to drive EV growth
Significant shift to EV
expected in Europe, US, UK globally. Many developed countries (Germany, France, UK, Norway) have announced
and China 100% shift to EVs by 2025/2040. China has announced aggressive policies to promote
EVs. All the Global Auto OEM’s are working on multiple EV platforms.
The EV market share in global light vehicle segment is expected to improve from current
1% to 8% by 2025 (26% CAGR), 24% by 2030 (24% CAGR) and 54% by 2040 (9%
CAGR).
In the two-wheeler space, China is leading in electric two-wheeler globally and sold ~16
mn electric two-wheeler’s in 2016 due to stringent emission norms.
Indian EV market: Everything needs to be done

Considering energy security, emission (As per World Health Organization, 10 out of world’s
20 most polluting cities are in India and also 1.2 mn causalities in 2016 due to pollution)
Ambitious Target
and to reduce oil import dependence, India has announced ambitious 100% EV adoption
by 2030 (from current ~0%).
Lack of EV infrastructure and affordability are the key hurdles for EV in India. Massive
Massive investments and investments will be required for establishing the EV infrastructure (primarily battery
Policy framework holds the
key capacity and charging infrastructure) supported by policy frame work and India specific
product development.
India will be announcing the comprehensive EV policy in December 2017.
Likely EV path in India: Three-wheeler  Two-wheeler  Intra city

buses  Taxis  Private use cars
Considering total cost of ownership (TCO), market readiness, commercial operation
feasibility, battery range and the (Likely) improvement in charging infrastructure, we
believe the EV path in India will be Three-wheeler  Two-wheeler  Intra city buses 
Improvement in charging Taxis  Private use car.
infrastructure and drop We expect meaningful EV penetration in three-wheeler by 2019 (by the organised players);
in LiB price to drive EV
in two-wheeler, Intra city buses and Taxis by 2020/2021 and Private use cars by 2025.
transition
Though, Tesla has recently demonstrated EV truck (Tesla Semi), considering higher
battery capacity requirements due to high payload, daily long distance travel and lack of
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battery charging infrastructure in high ways, we believe heavy commercial vehicle will
continue to remain ICE in the near future.
We expect tractors to remain ICE due to charging infrastructure constraints and power
situation in rural.
Overall, though India is targeting 100% EV by 2030, based on our discussion
with auto industry experts, we believe EV penetration in India can be 20-25%
by 2030.
Auto OEM: Maruti, M&M and TVS may have early entrant advantage
Considering the global developments in EV space and the Indian Government drive
towards EV, all the Indian auto major OEM’s are now working on EVs, not to lose out on
emerging opportunities.
Maruti: Parent Suzuki Motor Corporation (SMC), Japan is establishing a LiB battery
plant in Gujarat in Joint Venture with Denso and Toshiba, with an investment of Rs 11
bn and is expected to be in operation by 2020. Maruti/SMC has plans to export Hybrid/
Electric Vehicle from Gujarat. SMC has signed a MOU with Toyota, Japan and Toyota
will provide technical support to Suzuki to produce Electric Vehicles in India by 2020.
TVS Motor: TVS Motor will be launching a Hybrid two-wheeler in December 2017
and an Electric two-wheeler by March 2018. TVS Motor will be importing battery cells
and will be assembling the battery in-house. TVS has also developed its own battery
management system and motor design.
Bajaj Auto: Bajaj Auto has announced launch of Electric three-wheeler in 2018 and
Electric two-wheeler in 2020. The challenge for Bajaj Auto will be to maintain high
All major OEMs have began
charting thier EV plans domestic market share (59%) and profitability (EBITDA margin of ~30%) in electric
three-wheeler. On two-wheeler, EV may provide opportunity for Bajaj to enter scooter
market (Urbanite brand).
Hero MotoCorp: Hero MotoCorp has 30% stake in Ather Energy, a start-up in Bengaluru
working on eScooter (S340). Hero MotoCorp is also working on its own Electric two-
wheeler and is expected to launch the vehicle in 2020. The challenge for Hero MotoCorp
will be to design an electric motorcycle for mass commuter market and defend high market
share. However, the rural is expected to be ICE dominant for more time due to charging
infrastructure and power constraints.
Also, our understanding is that there is design challenges in accommodating electric motor,
battery and control systems in a commuter motorcycle frame.
Eicher Motors: We expect leisure biking to be ICE dominant in the near future.
Mahindra & Mahindra: M&M is the only company which has been selling lithium ion
electric cars for the last many years (e20 plus and eVerito) and the company has sold ~2K
vehicles in 2016. M&M has entered into strategic alliance with Ford to work together on
many areas, including EVs. M&M is also working on electric three-wheeler, two-wheeler
and LCV’s. Has already launched electric three-wheeler e-Alfa in India and two-wheeler
GenZe in the US market. With Government thrust on EV, M&M can improve market
share in auto segment.
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Ashok Leyland: AL has developed Electric bus “Circuit” and UK subsidiary Optare
already manufactures Electric Buses. Ashok Leyland has strategic alliance with Sun
Mobility for Electric Mobility solutions.
Tata Motors: Tata Motors is working on electric buses and electric cars in collaboration
with Tata Motors European Technical Centre (based in University of Warwick in UK).
Tata Motors has received order from EESL recently for supply of 10,000 vehicles, with
first phase supply of 250 vehicles in December 2017. JLR will be launching their first EV
I-PACE in 2018. However, globally, peers are planning many aggressive launches.
Auto component companies: Engine & Transmission component

companies to have significant impact
The transformation from ICE to EV is expected to have significant impact on the auto
component industry. Engine, transmission and exhaust system in a conventional ICE
vehicle will be replaced by battery, electric motor, inverter and control system in an Electric
Vehicle.
The following impact analysis is based on current product portfolio of the auto component
companies. Going forward, the companies can diversify into EV components.
The impact will be high for auto component companies like Federal Mogul, SamKRG
Piston, Ucal Fuel System, India Nippon and Talbros Automotive Components
Engine and transmission
component companies with manufacturing primarily ICE related components.
significant exposure to Precision Camshafts and Igarashi Motor is expected to have significant impact,
Indian three-wheeler and
as their current product is primarily ICE related and also both companies predominantly
two-wheeler markets to be
most impacted export to global passenger car market where we expect EV transition to happen faster.
Since transmission will get simpler in EV, Shivam Auto Tech and Hi Tech Gears may
have impact due to less content per vehicle.
Amara Raja and Exide currently manufactures only lead acid batteries and 60-65%
of revenue is from automotive. Both companies are now working on LiB batteries. No
significant impact expected in the near-term. Though electric cars and buses have auxiliary
lead acid batteries, the prime power source will be LiB batteries. With major OEM’s like
Maruti (Suzuki), TVS and M&M establishing their own LiB battery manufacturing/
assembly facilities, the current near duo play in lead acid battery market (AMRJ and Exide)
will be under threat in the long-term.
As EV does not require lubricants like engine oil, the lubricant companies like Castrol
will have impact on long-term, as the Electric Vehicle park increases.
The key product of Bosch India Limited – Fuel injection system is completely dependent
on ICE. However, CV, Tractor, after-market and non-auto contribute ~80% of revenue for
Bosch and will not have impact on EVs in the near future. On electric two-wheeler, Bosch
has significant presence in China and also Bosch Global is associated with global major
OEM’s for electric PV’s. Considering expertise of Bosch Global in EV space, we believe
EV will open up significant opportunities for Bosch in India. Bosch is already working with
domestic OEM’s on electric two-wheeler and three-wheeler in India and the company has
announced that Bosch will serve EV space in India through the listed company.
For Bharat Forge, non-auto and supply to CV segment is not expected to be impacted by
EVs in the near to medium-term. Supply to PV’s (~15% of revenue) to be impacted by EVs.
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Management has indicated that the company is already in discussion with global OEM’s
for supply of forged and machined components for EVs.
Companies like Sundram Fasteners, Bearing companies, Mahindra CIE,
Tube Investment, Minda Industries, Endurance Technologies, Sundaram
Clayton, Rico Auto, Lumax Auto Technologies, Minda Corporation, MM
Forgings, Rane Holding, Tube Investment, Banco Products and Pricol is likely
to have medium impact, as part of their current product portfolio will be impacted by EVs.
Tyre companies (MRF, Apollo, JK Tyres, CEAT, Good Year), Lighting
companies (Lumax Industries, FIEM Industries), Shock Absorber companies
(Gabriel, Munjal Showa), Sona Koyo Steering, Suprajit, Wheels India, Jay
Bharat Maruti/JBM Auto, Subros, WABCO India, Asahi India Glass, Bharat
Seats, PPAP Automotive are neutral to power train and hence no significant impact
due to EVs.
For Motherson Sumi, polymer business, rear view mirror and wiring harness is neutral
to power train. Light weighting and increase in wiring harness content in EVs will be
structurally positive for Motherson.
We do not expect significant impact for Automotive Axles, Jamna Auto, Setco
Automotive and GNA Axles, as we expect MHCV segment to be ICE dominant in the
near future.
JBM Auto has tied up with Solaris, Poland to design and develop Electric and Hybrid
buses for India.
Adaptation to EV and On export to global EV market, there is no significant export from India now, as the global
innovation is of paramount EV market is small. Considering the growth potential in global EV space, many Indian
importance
auto component majors are now exploring supply of structural components for global EV.
Sundram Fasteners has already started supply of Bevel Gear and surge tank cap to
Tesla. Motherson’s overseas subsidiaries (SMR & SMP) are already supplying EV parts
to Tesla, Renault Nissan, BMW & General Motors.
In the EV space, new opportunities lies in parts like LiB battery, motor, controllers and
micro-processors and may throw up new winners in auto component space as EV picks up.
Impact on other sectors

EVs can cause job losses in ICE vehicles related auto ancillary companies. Also, due to
lower maintenance requirements of EVs, it could affect after-sales service networks and
unorganised mechanics.
EVs will have negative impact on Oil & Gas companies and positive impact on power
generation companies/grids, electric motors and electronic component manufacturing
companies, charging infrastructure companies and LiB battery manufacturing companies.
On the metals side, demand for Steel, Lead and Platinum is expected to drop and demand
for Graphite, Nickel, Aluminium, Copper, Lithium, Cobalt and Manganese expected to
go up.
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How to play the theme

As EV industry is just evolving in India and also as most of the companies are yet to
announce their concrete EV plan, we have refrained from taking a definitive view on the
financial impact for the companies on EV transition.
However, we screen the companies based on their announced EV plan, financial strength
to access technology, nature of their current product profile, and technology support from
parent.
We believe the following companies can have positive traction on EV
Transition:
Positive measures to Maruti Suzuki: LIB Battery plant in Gujarat, Technology support from Toyota
combat EV threat
Mahindra & Mahindra: Early entrant in EV, developing EV products across segments,
(Likely) technology support from Ford.
TVS Motors: Ahead of peers in EV development
Motherson Sumi: Light weighting and increase in wiring harness to be structurally
positive. Motherson already supplies parts to EV vehicles of Tesla, Renault Nissan, BMW
and GM
Bosch: Access to high end global EV mobility
Sundram Fastners: Already supplying Bevel Gear and surge tank cap to Tesla
Based on current product profile, we suggest investors to keep track of

developments in the following companies:
Precision cam shaft: Export player. EV transition in global PV market to impact
precision cam shaft as cam shaft not required for EVs
Exercise caution and watch Igarashi Motor: Export player. EV transition in global PV market to impact Igarashi
out for developments motor as Electronic throttle control motors are not required for EVs
Amara Raja & Exide: OEMs like Maruti (Suzuki), TVS Motor, M&M are establishing
their own Battery manufacturing/assembly plants – Threat in long term.
Castrol: Long term threat, as Lubricants (Engine oil) is not required for EVs.
The current product profile of Federal Mogul, SAM KRG Piston, India
Nippon Electricals, Ucal Fuel systems, Talbros automotive components is
predominantly IC Engine related and may have to diversify to EV related components.
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Electric vehicles
Global automotive industry is on the verge of disruption. Electrification, connectivity,
shared mobility and autonomous driving is revolutionising automotive industry globally.
These trends is expected to shift markets and revenue pools, change mobility behaviour
and build new avenues for competition and cooperation.
Global Auto Trend
Source: McKinsey
Though Electric Vehicles have been in the global market for last many years, definitive
interest in EVs has been sparked with the rise of Tesla Motors. Tesla is credited with
Tesla – The game changer proving that EV can be compelling and reliable form of personal mobility in a desirable
for EV package with capabilities on par or superior to those of comparable premium segment
internal combustion engine (ICE) powered vehicles. Over the years, launch of Model S and
improved offerings from other OEMs have had favourable impact on EV.
Stricter emission regulation, drop in battery cost, more widely available charging
infrastructure and increasing customer acceptance is expected to support EV growth
globally.
Out of 92 mn light vehicles sold globally in 2016, ~700K vehicles (~1%) is Battery Electric
Global EV growth estimated Vehicle (BEV) & Plug in Hybrid Electric Vehicle (PHEV). On expected drop in Lithium
at 26% CAGR for next 15 Ion ( LiB) battery price, more models for buyers to choose from stricter emission regulation
years and Government initiatives, the global EV market share (in light vehicle) is expected to
sharply improve from current 1% to 8% by 2025 (26% CAGR), 24% by 2030 (24% CAGR)
and 54% by 2040 (9% CAGR).
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Annual Global Light Duty Vehicle Sales Estimate
Source: Bloomberg new energy finance
In the two-wheeler space, China is leading in electric two-wheeler globally and sold ~16
mn electric two-wheeler in 2016, due to stringent emission norms.
Considering energy security, emission (As per World Health Organization, 10 out of world’s
20 most polluting cities are in India and also 1.2 mn causalities in 2016 due to pollution)
Ambitious target by India
and to reduce oil import dependence, Indian government has announced ambitious 100%
electric vehicles by 2030 (from current ~0%).
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Global EV market
Out of 92 mn light vehicles sold globally in 2016, ~700K vehicles is electric vehicles (EV)/
Plug in Hybrid Vehicles (PHEV) and China leads with 300K vehicle sales (43.8% share).
Electric Vehicle Sales by Country, 2016
Source: Industry
Considering the global shift towards EV, the global major OEMs are now working on EVs
with multiple platforms. In 2016, the EV market was led by BYD (China), Renault Nissan
and Tesla leading the market share in 2016.
EV – Global market share 2016
BYD (China) 13%
Others 49%
Renault-Nissan
11%
Tesla 11%
BMW 8% VW 8%
Source: Industry, B&K Research
Model-wise, the largest selling model in 2016 is Tesla Model S (52,579), followed by Nissan
Leaf (47,662), BYD Tang (28,895) and Chevrolet Volt (28,297).
From the current ~1%, global light vehicle EV market share is expected to
Going forward significant grow to 8% by 2025, 24% by 2030 and 54% by 2040 on lower battery cost,
competition expected
incentives, widely available charging infrastructure, launch of new models
globally in EV
by various players and increasing customer acceptance.
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For environmental reasons, many countries have announced significant EV targets

EV Global Penetration & Target
35
Target:
30 100% by 28.8
Target: 2025
100% by
25 2040 23.6
Target:
100% by
20 Target: 2040
Target: 100% by
Target:
%
100% by 2030
15 2020: 5% 13.7
2030
2025: 20%
10
1.4 0.02 0.7 1.4 1.5
6.0
1.0 0.04 0.7 1.1 1.2
5 0.4 0.02 0.4 0.7 3.3
0.1 0.01 0.6
0.2 0.2 0.6
0.1 0.1 0.1 0.1 0.3
0
China India Germany UK France Norway
2012 2013 2014 2015 2016
Source: IEA (International Energy Agency)
LiB battery cost

Lithium Ion batteries (LiB) is the widely used energy source in Electric Vehicles globally
and currently contribute ~35% of total electric vehicle cost. Due to higher energy density
and technology advancements, the LiB battery price has been dropping sharply and is a
driving factor on growth of Electric Vehicles globally.
The cost of LiB batteries has dropped from US$ 1,000 per kWh in 2010 to US$ 200-250
per kWh now. It is expected to further drop to below US$ 140 levels by 2022 due to scale,
technological advances and sharp increase in battery energy density.
Weighted average battery pack price and indicative ranges (US)

US$ per kWh
Significant drop in LiB

battery price
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Price breakup for Lithium batteries
US$ per kWh
LiB battery – capacity expansion

Considering the expected global shift towards EV, the leading global Lithium Ion battery
players – Panasonic, CAIL (China), HYD (China), LG CChem (South Korea) and Samsung
(South Korea) are expanding capacity multifold.
Battery capex plan of global majors
Giga LiB battery facilities

are being established
globally
Source: Cairn ERA
Significant technology development is now happening in LiB battery and many companies
including Toyota is working on solid state batteries which could significantly improve the
energy density and also eliminate the liquid electrolyte thus making the battery pack safer
and more efficient.
Currently, India does not have LiB battery capacity and massive investments will be
required.
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Incentives
Due to higher battery cost, the purchase cost of EV is expensive to ICE globally now.
Incentives to be phased out Considering the purchase cost difference between ICE and EV vehicles, purchase incentive
on drop in LiB prices of US$ 1,250 to 10,000 per vehicle for Battery Electric Vehicles (BEV) and Plug in Hybrid
Electric Vehicle (PHEV) is being offered by various countries to promote EVs.
Electric Vehicle Incentives in 2015
Source: IEA, B&K Research
In most of the developed countries, the incentive is expected to remain until 2020 and then
gradually phased out by 2025, by which time the cost of Electric Vehicle is expected to
match IC vehicle price due to drop in LiB battery prices.
Charger types and global charging infrastructure

Types of EV chargers
The EV chargers is broadly classified into three types:
Level 1: Also called as “slow chargers” and it is just plugging into a standard electrical
outlet. Can cater to overnight charging needs of Electric two-wheeler, three-wheeler and
passenger car.
DC fasting charging can Level 2: Also called as fast chargers and most public charging stations globally are Level
charge 80% of battery
capacity in 20 minutes 2 chargers. Current cost of Level 2 chargers is US$ 600 to US$ 1,000.
DC fast: Unlike Level 1 and Level 2 chargers, the conversion from AC to DC happens in
the charging station in DC fast chargers. This allows DC chargers to supply more power
and charge vehicles faster. Depending upon the specification, the DC fast charger cost
varies between US$ 10,000 to 40,000.
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Typical time to charge the battery by charging type
Charging infrastructure
For EV penetration, the eco system – Specifically the charging infrastructure is the key
constraint globally and most of the developed economies are creating large scale charging
infrastructure.
Global Charging Points Estimate by 2020
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EV plan by global players

Considering the global shift towards EV, the global major OEMs are now working on EVs
with multiple platforms.
From current 100+ EV models now, it is estimated that ~200 EV models will be available
globally by 2020.
Electric – Car Boom: Models by style and range available through 2020
The EV plan by global auto majors:

• VW Group will roll out 80 electric cars by 2025 across group brands which include
Skoda, SEAT and Audi. VW group is aiming for 2-3 mn EV sales by 2025. All its
models are expected to have Electric Versions by 2030.
• Renault – Nissan is one of the leaders in deployment of modern electric cars due to
top selling Nissan Leaf introduced in 2010 and Renault’s Zoe Sub compact launched in
2012. The group is targeting 12 new pure – Electric models on road by 2022.
• General Motors, manufacturer of Electric Chevrolet Bolt, plans to launch a new
Focussed EV action by
global auto majors family of Electric Vehicle by 2021. GM aims to sell 1 mn electric vehicles a year by
2026, many of them in China.
• Ford plans to invest US$ 5 bn in Electric Vehicles by 2022 and introduce at least
13 Electric/Hybrid models worldwide in the next five years including a small SUV
offering an estimated range of 300 miles in one charge.
• Daimler is investing Euro 10 bn in Electric and Hybrid technology and is preparing
to launch the EQ electric car. It aims for 100K annual electric car sales by 2020. By
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2022, Daimler plans to offer an electric version of every model it sells, with a total of at
least 50 Electric or Hybrid models for sale.
• BMW, a pioneer in electric cars launched i3 in 2013. The company plans to launch 12
full electric models by 2025, with a range of up to 700 KMs.
• Volvo Cars has announced that all Volvo car models launched after 2019 will be
Electric or Hybrids.
• Toyota wants all its vehicles to be zero emission by 2050. Toyota is investing heavily
on technologies such as solid state battery which has the potential to cut the cost of
making electric cars and is expected to be commercialised in first half of 2020’s. Toyota
has established a new venture to develop Electric Vehicle in partnership with Mazda
Motor. Toyota has also signed agreement with Suzuki Motor Corp for introduction of
electric cars in India in 2020.
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Indian EV market
Indian Automotive Market
The Indian automotive market is amongst the fastest growing automotive markets globally.
The auto and auto ancillary industry is one of the major contributors of India’s industrial
GDP and contributes ~7.1% of overall GDP. Further, it currently employs 30 mn people
directly and indirectly.
In the passenger vehicle segment, production base is expected to increase from ~3 mn
Ambitious Target – currently to ~7 mn passenger vehicle by 2025, to become the third largest passenger car
• Policy framework manufacturer globally.
• Charging infrastructure
On the energy front, India is the third largest oil importer globally and imports 81% of
• Domestic LiB battery
manufacturing capacity requirement. India spends ~US$ 80 bn annually on oil imports.
• Launch of India specific Considering energy security, emission (As per World Health Organization,
EVs are key factors
10 out of world’s 20 most polluting cities are in India and also India had 1.2
mn causalities in 2016 due to pollution) and to reduce oil import dependence,
India has announced ambitious 100% Electric Vehicles by 2030 (from current
0%).
The Government of India’s think tank, NITI Aayog has published a document “India
Leaps Ahead – Transformative Mobility Solution for All” in May 2017 and has estimated
that India can save 64% of energy consumption and 37% of carbon emission in 2030 by
pursuing a shared, electric and connected mobility future. This would result in reduction
of 156 Mtoe in petrol and diesel consumption for 2030, implying a saving of US$ 60 bn (@
US$ 52/barrel).
Energy consumption from motorised passanger transport Co2 emissions from motorised
Source: NITI Aayog * BAU - Business As Usual
The Electric Vehicle penetration is currently very low in India due to lack of
charging infrastructure, high cost of EV, affordability and lack of EV models
for the buyer.
NITI Aayog has published a 15-year time plan (2017-32) for a shared, connected and
electrical mobility for India in three phases.
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Plan by NITI Aayog
Source: NITI Aayog
The first phase (2017-19) will be near-term actions to build policy frame work, build market
confidence and capture economically feasible opportunities. The second phase (2020-24)
will be for development of charging infrastructure, supply chain and short listing policy
frame work and incentives. The third phase (2025-32) will be for phasing out subsidies,
refining policies and incentives and scaling for international demand.
India will be announcing the comprehensive electric vehicle policy in December 2017.
Incentives and Initiatives in India for EVs

To promote EVs, India has FAME (Faster Adoption and Manufacturing of Hybrid &
Electric Scheme) incentive and also concessional GST rates.
FAME
FAME scheme was launched on 01 April 2015 under the National Electric Mobility
Despite FAME and GST Mission Plan 2020 (NEMMP).
concession, EV sales in
India is low due to lack of In NEMMP, the government is facilitating and supporting the charging infrastructure and
charging infrastructure and development of indigenous battery technology which is fast charging, high capacity and
lack of choices high range per charge run, in addition to incentive through FAME.
In the union budget 2017-18, Rs 1.75 bn has been allotted for promotion of green vehicles
in the fiscal.
Incentive per vehicle under FAME scheme

EV incentives/vehicle
(Rs ’000s)
Two-wheeler 2-30
Three-wheeler 3-61
Four-wheeler 13-138
LCV 17-187
Bus 3,400-6,600
Source: Industry
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Concessional GST rates

To promote EVs, Electric Vehicles is being charged at 12% GST, as against 29% to 53%
for ICE passenger vehicles. Government is also considering 0% GST for Electric Vehicles
for three years.
Passenger vehicles – Post GST rates
Source : Industry, B&K Research
Purchase of 10,000 Electric Vehicles by EESL

Through, Energy Efficiency Services Limited (EESL), Government propose to buy 10,000
Electric Vehicles to replace part of existing Petrol/Diesel vehicles used in Government
A baby step in right offices, over the next three-four years.
direction by Government of
India In first phase, Tata Motors will be supplying 350 vehicles and Mahindra & Mahindra 150
vehicles, by November/December 2017.
EESL also propose to float tender for another 10,000 vehicles by March-April 2018.
Charging infrastructure in India

Lack of charging infrastructure is one of the key hurdles for EVs India. Currently, India
has only ~500 charging stations, as against 150,000 charging points in China in 2016.
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Charging infrastructure across India
Charging infrastructure As per estimates, India may require 5 mn public charging stations by 2030.
can be a meaningful In our view, the charging infrastructure has to be created upfront to drive EV adoption,
divesification for many
power generation, oil rather than catching up with EV sales later. Already interest on charging infrastructure is
manufacturing and auto shown by state owned energy companies (NTPC , Power Grid , Indian Oil), automobile
companies OEM’s (Maruti, M&M), private companies (Tata Power) and oil marketing companies.
NITI Aayog has also suggested swapping of batteries, to improve the EV eco system.
Potential EV path in India: 3W → 2W → Intra city Buses → Taxis →

Private use car
Considering total cost of ownership (TCO), market readiness, commercial operation
feasibility, battery range and (Likely) improvement in charging infrastructure, we believe
the EV path in India will be three-wheeler → two-wheeler → Intra city buses → Taxis →
Private use car.
Three-wheelers
Due to commercial feasibility, the three-wheeler segment is already witnessing influx of
e-rickshaws and as per estimates the current e-rickshaw population in India is around 1 mn.
Due to operational cost saving, the total cost of ownership (TCO) of Electric three-wheeler
for commercial application is already 8% advantageous to ICE three-wheeler. After the
implementation of BS VI emission norms in 2020, ICE vehicle cost is expected to increase
by 8% to 15% and then EV three-wheeler is expected to be more advantageous by 23%.
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Average annual cost of ownership for commercial three-wheeler

120,000
100,000
80,000
60,000
Rs
40,000
20,000
0
Diesel ICE EV Diesel ICE EV
BS IV (current scenario) Post BS VI
Purchase cost Fuel cost Insurance cost Maintenance cost Battery replacement cost
Source: B&K Research
TCO already in favour of However, most of e-rickshaw is currently manufactured by unauthorised players with use
electric three-wheeler of Lead acid batteries (which needs to be replaced within 7~8 months) and the vehicles are
not reliable.
Policy framework and Due to unorganised nature of the segment, high interest rates is charged by the unorganised
improvement in charging lenders. Also, there is rampant power theft for charging.
infrastructure can drive
nationwide adoption As the sector is cost sensitive, LiB battery is commercially unviable and warrants a much
higher scale for adoption.
Given the head start of e-rickshaw segment, we believe a mild push by the Government
will drive a nationwide adoption and we expect meaningful penetration by 2019 on
improvement in charging infrastructure and necessary policy frame work in place.
Considering the potential in electric three-wheeler, established OEM’s are working on
e-rickshaws.
• Mahindra & Mahindra has already launched e-Alfa Mini electric rickshaw for
passenger transport with Lead acid batteries and is working on e-rickshaws with LiB
battery.
• Bajaj Auto has announced that the company will be launching electric three-wheeler
in 2018.
• TVS Motor show cased its electric three-wheeler concept in Auto Expo 2016.
• Kinetic Green Energy and Power Solutions Limited has launched electric
three-wheeler in April 2017, with LiB battery.
Two-wheeler
Two-wheeler industry is close to market readiness and is approaching break-even in EVs.
After implementation of BS VI in 2020, TCO of electric two-wheeler will be advantageous
by 13% than Petrol ICE.
We expect two-wheeler shift to be mainly driven by limited operational use for daily
commuting and ease of charging.
An end-to-end eco system (from in-house manufacturing to setting up charging
infrastructure) being created by start-ups is likely to accelerate the adoption of electric
two-wheelers.
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With Government push on charging infrastructure development, we believe EV adoption

in two-wheeler (that are mainly used of daily commuting 30-40 kms/day) can gain pace
from 2020.
The electric two-wheeler development globally is on Scooters and our
understanding is that there is design challenges in accommodating electric
motor, battery and control systems in commuter motorcycle frame.
Average annual cost of private ownership for two-wheeler
30,000
25,000
20,000
15,000
Rs
10,000
5,000
0
Petrol ICE EV Petrol ICE EV
We expect meaningful Major OEM’s and start-ups working on electric two-wheeler space.
penetration of electric two-
wheeler in urban from 2020 • TVS Motor: Will be launching Hybrid two-wheeler in December 2017 and Electric
two-wheeler in March 2018. Battery and battery management system will be assembled
in-house.
• Bajaj Auto: Working on EVs. Launch of electric two-wheeler by 2020. May enter
scooter segment through eScooters.
• Hero MotoCorp: Has 30% stake in Ather Electric (A Electric two-wheeler start-up).
Working on own electric two-wheeler design and launch expected in 2020.
• Ather Electric: A Electric two-wheeler start-up and will be launching S340 eScooter
in 2018. Establishing a manufacturing plant in Bengaluru.
• Honda: Working on a global electric two-wheeler and will be launched in 2018.
• Hero Electric: Already manufactures electric two-wheeler with lead acid batteries.
Despite lower prices (compared to ICE), very low sales volume due to poor performance.
The company is now working with Bosch for LiB battery technology and platform.
• Electrotherm: Manufactures electric two-wheeler from 2006 with lead acid batteries
with brand Yo bikes. Very low volume due to poor performance.
• Ampere Electric, Coimbatore: A Electric two-wheeler start-up already
manufactures Electric two-wheeler with lead acid batteries. Mr Ratan Tata and Mr
Kris Gopalakrishnan have invested in this start-up.
• Tork Motorcycles, Pune: It has launched its first electric bike T6X (equivalent to a
200CC motorcycle) at a price of Rs 125,000.
MHCV – Intra city buses could go electric

Due to high vehicle utilisation, the potential to switch to EVs remain high in MHCV –
Goods carrier. However, considering higher battery capacity requirements due to high
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payload, daily long distance travel and lack of battery charging infrastructure, we believe
MHCV – Goods carrier will continue to remain IC in the near future. Though, Tesla has
displayed EV truck (Tesla semi) recently, we believe EV penetration in MHCV – Goods
carrier will take significantly longer time.
In the CV segment, we believe SCVs and LCVs could be early adopters due to lower pay
load capacity and lesser average daily run.
Despite high cost difference, we believe intra-city bus segment is more
market ready for electric because of shorter trip lengths, route predictability
and ease of fast charging at bus depots.
In addition, most of the intra-city buses is operated by state owned enterprises with
investment capabilities and/or with state government financial support.
As diesel buses are one of the main city pollutants, we are already witnessing few e-bus
pilots by state owned enterprises – Navi Mumbai, Himachal Pradesh, with a few more in
the pipeline – Chandigarh, Telangana and Gurgaon.
Major players and plans for electric buses:
• Ashok Leyland has developed Electric Bus “Circuit” and is now test driven in Chennai.
Has strategic alliance with Sun Mobility to develop Electric Mobility solutions. 100%
owned subsidiary Optare already manufactures electric buses in UK.
• Tata Motors is running electric buses in Chandigarh and Guwahati.
• Volvo Bus manufactures electric vehicles globally and yet to announce the strategy for
India.
• BYD Group China has formed a JV with Goldstone Infratech Limited to manufacture
Electric Buses. The company will supply 6 buses to Mumbai and 25 buses to Himachal
Pradesh.
• JBM Auto has tied up with Solaris, Poland to design and develop electric and hybrid
buses for India.
• Zhuhai Yinlong of China, which also manufactures LiB batteries in China, has
plans to set-up an Electric Vehicle manufacturing plant (for manufacture of buses &
cars) in Punjab.
Passenger vehicles
In the passenger vehicle segment, the cost dynamics of running an EV for taxis, with high
vehicle utilisation, is quite favourable by 2020 when BS VI gets implemented. Already
M&M and Tata Motors have tied up with Ola & Uber on experimental basis in Nagpur
and Delhi.
However, for a private user, the TCO for an EV remains much higher.
We expect meaningful shift in private use passenger vehicles from ICE to EV
by 2025 when TCO of EV catches up with ICE on decrease in battery prices,
scale for EVs, supported by widespread network of charging stations and
launch of India specific EVs.
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Average annual cost of commercial ownership of PV

450,000
400,000
350,000
300,000
250,000
Rs
200,000
150,000
100,000
50,000
0
Petrol ICE Diesel ICE EV Petrol ICE Diesel ICE EV
Average annual cost of private ownership of PV

250,000
200,000
150,000
Rs
100,000
50,000
0
Petrol ICE Diesel ICE EV Petrol ICE Diesel ICE EV
In the meantime, by increasing the excise duty and withdrawing incentives for hybrid
vehicles in the last Union Budget, Government has expressed its preference for EVs over
hybrids. However, considering lack of charging infrastructure, stricter emission norms
from 2020 and fuel efficiency norms (CAFÉ), many major OEM’s believe that hybrid may
be the path to achieve total EVs later.
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Major OEM’s working on Electric PV/Hybrid space

• Suzuki Motor Corporation (SMC), Japan, parent of Maruti Suzuki is establishing a
LiB battery plant in Gujarat in Joint venture with Toshiba (40% stake) and Denso (10%
stake) and production is expected to commence from 2020. SMC has signed a MOU
with Toyota, Japan and Toyota will provide technical support to Suzuki to produce
Electric Vehicles in India, around 2020. SMC is also planning to build and export
Electric/Hybrid vehicles from Gujarat plant.
• Mahindra & Mahindra’s EV arm, Mahindra Electric currently manufactures and
sells two electric cars – e20plus and eVerito. The company is working on advanced
EV technology for longer range and better performance EVs. The company is also
planning for expanding the current production capacity from 5K/annum to 60K/
annum in Bengaluru. With support from overseas subsidiaries – Ssangyong and
Pininfarina, M&M is working on high end EVs. M&M has received order for 150 EVs
from EESL and has delivered 20 vehicles. Also, M&M is now running 100 EVs as taxis
in association with Ola in Nagpur.
Challenging time for
auto majors to work • Tata Motors is working on various electric cars (Tiago, Tigor and also Nano as
for EVs alongwith BSVI per media reports) in collaboration with Tata Motors European Technical Centre
implementation in 2020 (TMETC). Tata Motors has received order for ~10,000 EVs from EESL and 350
vehicles to be delivered before December 2017.
• Renault Nissan has popular global EV brand “Leaf” and “Zoe” and is working on
Kwid EV for China launch in 2019. Yet to announce EV plan for India.
• Ford has entered into strategic alliance with M&M for exploring various avenues
including EVs.
• Other multinationals like Hyundai, General Motors, Volkswagen, BMW, Audi
are working globally on EVs and are yet to announce EV plan for India.
• JSW Energy is diversifying in to electric car manufacturing with capex of Rs 35 ~ 40
bn and aims to roll out first vehicle by 2020.
Auto OEMs under our coverage

Considering the global developments in EV space and the Indian Government drive
towards EV, the Indian auto majors are now focussing on EVs, not to lose out on emerging
opportunities.
But, at the same time, considering the uncertainty on timing of shift to EVs, the companies
are not slowing down the development activities in ICE vehicles.
From now on, before any major investment decisions, we expect the investment proposal
to go through the EV filter.
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EV status of auto OEMs under our coverage

1 Ashok Leyland AL has developed Electric bus “Circuit” and is now test driven in Chennai. The UK subsidiary Optare already
manufactures Electric Buses. AL has strategic alliance with Sun Mobility (led by Mr Chetan Maini of Reva Car)
for Electric Mobility solutions.
2 Bajaj Auto Bajaj Auto has announced launch of Electric three-wheeler in 2018 and Electric two-wheeler in 2020. The
challenge for Bajaj Auto will be to maintain its high domestic market share (59%) and profitability (EBITDA
margin of ~30%) in electric three-wheeler. In two-wheeler, EV may provide opportunity for Bajaj to enter
scooter market. Also, subsidiary KTM has technology for high end electric two-wheeler motor bikes (KTM
Freeride E).
3 Hero MotoCorp Hero MotoCorp has 30% stake in Ather Energy, a start-up in Bengaluru working on eScooter (S340) and the
vehicle is expected to be launched by Ather Energy in 2018. Hero MotoCorp is working on its own electric two-
wheeler and is expected to launch the vehicle in 2020. The challenge for Hero MotoCorp will be to design an
electric motorcycle for mass commuter market and defend high market share. However, the rural is expected to
be ICE dominant for some more time due to charging infrastructure and power constraints.
4 TVS Motor TVS Motor will be launching hybrid two-wheeler in December 2017 and electric two-wheeler by March 2018.
TVS Motor is ahead of its peers in EV development and is likely to have an early entrant advantage. TVS Motor
will be importing battery cells and will be assembling the battery in-house. TVS has also developed its own
battery management system and motor design.
5 Maruti Suzuki Though Maruti believes hybrid will be the route in the medium-term to achieve EV finally in India, the
company is now working on India Specific EVs, considering government focus on EVs. Parent Suzuki Motor
Corporation (SMC) is establishing a Lithium ion battery plant in Gujarat in Joint Venture with Denso and
Toshiba, with an investment of Rs 11 bn and is expected to be in operation by 2020. The cell module will be
supplied by Toshiba and Denso will share the technology platform. Maruti/Suzuki has plans to export Hybrid/
Electric vehicle from Gujarat. SMC has signed a MoU with Toyota, Japan and Toyota will provide technical
support to Suzuki to produce Electric Vehicles in India by 2020.
6 Mahindra & Mahindra M&M is the only company which has been selling Lithium ion electric cars for the last many years (e20 plus
and eVerito) and the company has sold 2K vehicles in 2016. Despite Government incentives, the sales has not
been encouraging due to lack of infrastructure and lower range per charge (80 to 110 kms). M&M is already
working on Electric three-wheeler, two-wheeler and LCVs. Has already launched Electric three-wheeler e-Alfa
in India and two-wheeler GenZe in the US market. With Government thrust on Electric Vehicle, M&M can
improve market share in auto segment. In the tractor segment, we believe tractor will be ICE dominant due to
infrastructure constraints and power situation in rural areas.
7 Eicher Motors We expect leisure biking to be ICE dominant in the near future.
8 Tata Motors Tata Motors is working on Electric Buses and Electric Cars in collaboration with Tata Motors European
Technical center (based in University of Warwick in UK). Tata Motors has received order from EESL recently
for supply of 10,000 eVehicles, with first phase supply of 250 vehicles in December 2017.
JLR will be launching their first EV I-PACE in 2018 and also working on more platforms. However, globally,
peers are planning many aggressive launches.
Impact of EV on auto component companies

The transformation from ICE vehicle to EVs is expected to have significant impact on the
auto component industry.
An EV is relatively simpler to build with only 20 moving parts against ~2,000 in an ICE
vehicle.
The engine, transmission and exhaust system of a conventional ICE vehicle will be replaced
by battery, electric motor, simpler transmission system, inverter and control systems in an
electric vehicle, with estimated cost structure comparison as below:
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Cost structure comparison – ICE versus EV
The current revenue break-up for auto component industry in India is:
Auto Components Industry – Revenue Breakup
Engine Parts and Drive

Transmission parts to have
impact on EV
Source: Automotive component manufacturers Association (ACMA)
The impact on EVs will be significant for auto ancillary companies manufacturing engine
parts (Cylinder block, Cylinder Head, Crankshaft, Camshaft, Connecting rod, Air intake,
Exhaust systems, Fuel injection system, Cooling system), Drive and Transmission parts
(Clutch, Gear Box, Differential) and part of electrical parts (Generator, Starter motor).
There may not be significant impact on Body and Chassis parts, Suspension parts,
Equipment (A/C, Wiper, Heater, Infotainment) and others like Tyres, Mirrors, Glass,
Interiors.
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Impact on major auto components

Negative impact Neutral Positive impact
Engine parts Steering systems Electric motors
Clutch Seats LiB batteries
Radiators Headlights Wiring harness
Gears Leaf springs Inverter
Generator Shock absorbers Controllers
Lubricants Tyres Microprocessor
Wheel
Existing power train related suppliers would lose markets, making them significantly
smaller in an EV scenario. Whereas new opportunities lies in EV parts such as LiB battery,
motors, controllers and microprocessors.
The existing suppliers will not only have to deal with the transition but also face competition
from the new entrants in the industry such as technology companies and battery companies.
As EVs gain traction in India, a number of foreign collaborations, partnerships and
consortiums between OEM’s, auto component suppliers and battery manufacturers is
expected.
We analysed the impact of EV on the major listed auto ancillary companies on the following
criteria and grouped into three categories: high impact, medium impact and low/positive
impact:
• The impact analysis is based on current the product portfolio of the auto component
companies. Going forward, the companies can diversify to EV components/products
and has not been considered in our impact analysis.
• In India, we expect EV transition in three-wheeler and two-wheeler, followed by taxis
in passenger vehicle segment and then private use cars.
• In the commercial vehicle segment, intra-city bus segment is expected to move towards
EV (due to environmental concerns). We expect goods carrying MHCV trucks (~85%
of domestic MHCV volume) to remain ICE due to high pay load capacity, battery
range cover and lack of charging infrastructure in highways.
• Tractors to remain ICE due to charging infrastructure constraints and power situation
in rural.
• Considering the uncertainty in EV transition time frame and also as most of the
companies are yet to announce concrete plan for EVs, we have not worked out the
financial impact for the companies.
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High impact
1 Amara Raja Batteries AMRJ currently manufactures only lead acid batteries and ~66% of revenue is from automotive. R&D
under progress for LiB battery technology. Has access to Lithium ion technology from JV partner
Johnson Control. No significant impact expected in the near-term due to EV. Though electric cars
and buses have auxiliary lead acid batteries, the prime power source will be LiB batteries. With major
OEM’s like Maruti (Suzuki), TVS and M&M establishing own LiB battery manufacturing/assembly
facilities, the current duo play in lead acid battery market (AMRJ and Exide) will be under threat in
the long-term.
2 Exide As like AMRJ, Exide currently manufactures only lead acid batteries and ~60% is automotive. Has
tied up with Chawai Group, China for two-wheeler LiB batteries. Long-term threat due to EV, as like
AMRJ.
3 Federal Mogul Market leader in Piston, Piston rings and also a major player in Valve seats and Valve guides, all
associated with IC engines.
4 SamKRG Piston Manufactures Piston and Piston rings primarily for two-wheeler segment and 100% associated with
ICE.
5 India Nippon Electricals Manufactures auto electrical products (CDI, regulator) for two-wheeler/three-wheeler segment and the
products may not be required for electric two-wheeler/three-wheeler.
6 Shivam Autotech Limited Key supplier of transmission components to Hero MotoCorp and transition to EV in two-wheeler
segment to impact the company as transmission system is much simple in EV and hence less content
per vehicle.
7 The Hi Tech Gears Transmission component supply to domestic two-wheeler (~50% of revenue) to have impact due to less
content per vehicle.
8 Talbros Automotive Components Core standalone business and subsidiary Nippon Leakless Corporation to have impact due to EVs.
Two-wheeler and three-wheeler segment contribute 37% of domestic sales and PV 28% and will have
impact.
9 Ucal Fuel Systems Manufactures carburetors for two-wheeler/three-wheeler and will not be required for electric two-
wheeler/three-wheeler.
10 Precision Camshafts Manufactures camshafts, which are used in IC engines. ~70% export to USA and Europe passenger
car market. EV transition and global PV market to impact Precision Camshafts.
11 Castrol 40-45% revenue on supply of lubricants to personal mobility segment (two-wheeler and PV). Long-
term threat, as lubricants (engine oil) are not required for EVs.
12 Igarashi Motors Predominantly an export player. Currently supplies DC Motors for Electronic Throttle control and is
also working on supply of DC Motors for Exhaust Gas Recirculation (EGR) and Turbochargers for the
global market. All the three motors are associated with IC engines and may not be required for EV.
Can diversify to comfort motors in cars like Power Windows, Seats, Mirrors. However, this segment is
already crowded.
13 L.G. Balakrishnan & Bros Two-wheeler chain business (~60% of revenue) – expected to be impacted by electric scooters.
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Medium impact
1 Bosch The key product of Bosch India Limited – Fuel injection system is completely dependent on IC engines.
However, CV, Tractor, after-market and non-auto contribute ~80% of revenue for Bosch and will not have
impact on EVs in the near future. On electric two-wheeler, Bosch has significant presence in China and
also Bosch Global is associated with global major OEMs for electric PVs. Considering expertise of Bosch
Global in EV space, we believe EV will open up significant opportunities for Bosch in India. Bosch is already
working with OEMs on electric two-wheeler and three-wheeler in India and the company has announced
that Bosch will serve EV space in India through the listed company.
2 Rane Holding Rane Madras, Rane TRW and Rane NSK may not have impact due to EV. Valve train components (Engine
valves) will have impact due to EV (~15% of consolidated revenue).
3 Rico Auto Industries Supply of Engine & Transmission components to two-wheeler and PV to be impacted by EV (Our estimate:
40-45% of revenue). Management has indicated that the company is working on aluminium castings for
global EVs.
4 Sundaram Clayton Castings to two-wheeler (TVS Motor) and passenger vehicle (Primarily Hyundai) to have impact on EVs
(~50% of revenue). We believe supplies to CV players – Cummins, Volvo, Daimler and WABCO may not
have impact in the near future.
5 Bharat Forge Non-auto and supply to CV segment not expected to be impacted by EVs. Supply to PVs (~15% of revenue)
to be impacted by EVs in near future. Management has indicated that the company is already in discussion
with global OEMs for the supply of forged and machined components for EVs.
6 Bearing companies: SKF, Supply to non-auto will not have impact on EVs (~50% of revenue for the bearing industry). In the auto
FAG, Timken segment, supply to two-wheeler and PV engine related bearings to be impacted (Our estimate: ~10% of
revenue). However, the bearings used in EV will be of high precision and will offset to some extent.
7 Sundram Fasteners Supply of Engine and Transmission components in both domestic and export markets will have impact due
to EVs (Our estimate: ~20% of revenue). However, the company is already working on EV components.
Sundram Fasteners has received order from Tesla for supply of Bevel Gear and surge tank cap.
8 Endurance Technologies Suspension and Braking components may not have impact due to EV. However, part of aluminium casting
(Cylinder block, Cylinder head) and Transmission components will have impact due to EVs.
9 Mahindra CIE Castings, Composites and Stampings – No impact due to EVs. Crankshafts and Gears to PV to have impact
(~10% of consolidated revenue).
10 Minda Industries Switches, Horns, Alloy wheels – No impact due to EVs. CNG/LPG kits, batteries, air filter, canister to have
impact due to EVs. However, the revenue contribution is currently not significant.
11 Minda Corporation Locks, Wiring harness, Plastic components – No impact due to EVs. auto electricals and part of few
aluminium castings will have impact due to EVs. But revenue contribution currently not significant.
12 Lumax Auto Technologies Lighting, Chassis and Frames, Molded parts and after-market – No impact. Gear shifters, intake system and
Oxygen sensor (12-15% of consolidated revenue) will have impact.
13 Tube Investment Cycles, Engineering and Door Frames – No impact. Two-wheeler chains (~10% of revenue) will have impact.
14 Banco products MHCV segment dependent – May have limited impact due to Electric Buses.
15 MM Forgings Supplies to domestic and overseas PV segment (~10% of revenue) will have impact.
16 Pricol Driver information system and Telematics will not have impact due to EVs. Sensors, Pumps and the new JV
for oxygen sensor will have impact due to EVs (Our estimate: ~25% of revenue).
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Low/Positive impact due to EVs

1 Automotive Axles MHCV segment dependent – No significant impact due to EVs in near future.
2 Suprajit Engineering Neutral to power train. Phoenix Lamps also neutral to power train.
3 Bharat Seats Neutral to power train.
4 Lighting companies: Lumax Industries, FIEM Industries Neutral to power train.
5 Shock absorber companies: Gabriel, Munjal Showa Neutral to power train.
6 GNA Axles CV and Tractor dependent – No significant impact expected due to EVs in
the near future.
7 Jamna Auto Industries Neutral to power train
8 Jay Bharat Maruti/JBM Auto Power train – Neutral. JBM Auto has entered into JV with Solaris, Poland for
Electric Buses.
9 Motherson Sumi Systems Polymer, rear view mirror and wiring harness business – Neutral to power
train. Light weighting and increase in wiring harness in EVs will be structurally
positive for Motherson. It’s overseas subsidiaries (SMR & SMP) are already
supplying EV parts to Tesla, Renault Nissan, BMW & General Motors.
10 Sona Koyo Steering Systems Neutral to power train.
11 Subros Neutral to power train.
12 Tyre companies: MRF, CEAT, Apollo, JK Tyre Neutral to power train.
13 WABCO India CV dependent – No significant impact expected due to EVs.
14 Wheels India/Steel Strips and Wheels Neutral to power train.
15 Nelcast MHCV and Tractor dependent – No impact expected due to EVs in the near
future.
16 Asahi India Glass Neutral to power train.
17 ZF Steering Gear Supplies Steering System for MHCV and Tractors – No impact due to EVs in
near future.
18 Setco Automotive Clutches for CVs – No impact expected due to EVs in near future.
19 PPAP Automotive Neutral to power train.
Implication for other sectors

EVs could cause impact in employment opportunities in ICE vehicles related auto ancillary
companies. Also, due to lower maintenance requirements of EVs, it could affect after-sales
network and unorganised mechanics.
In addition to automotive, EVs can have direct & indirect impact in many other sectors.
EV impact on various sectors

Negative impact Positive impact
Oil & Gas companies LiB battery manufacturers
ICE component suppliers Electric Motor & Component manufacturers
After-sales network Power Generation companies/Grids
Unorganised mechanics Mining Companies (Li, Co, Gr, Ni, Cu, Mn)
Mining companies - Fe, Companies and start-ups establishing battery charging and swapping
Pb, Pt set ups.
Impact of EV on Metals
Transition to EV will have positive impact on metals like Graphite as graphite is the
material used for anode in LiB batteries. For Cathode, different formulations are used with
Nickel, Cobalt and Manganese. The Electrolyte in LiB batteries is Lithium. Including
motors, it is also estimated that electric cars contain about 3 times more copper than a
regular IC vehicle.
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On the other side, due to light weighting in EVs, demand for aluminium is expected to go
up and with corresponding drop in steel. Requirement for lead is expected to drop, due to
drop in lead acid battery requirements. Platinum used in catalytic converter is expected
to drop.
Demand surge: Global metals and materials demand due to EV
Source: Bloomberg New Energy Finance
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B&K Universe Profile

By Market Cap (US$ mn) By Recommendation
180 160
156
160 140 133
141
140 120
no. of companies
no. of companies
120
100 88
100
80
80 61
60
60
40 40
10 20 13 11
20 1
0 0
> $2bn $200mn - $2bn < $200mn BUY OP UP SELL NR UR
B&K Securities is the trading name of Batlivala & Karani Securities India Pvt. Ltd.
B&K Investment Ratings.

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Electric Vehicles - Sector Update - Nov 17

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Batlivala & Karani

Sec tor Updat e 30 November 2017

Auto – Electric Vehicles

Annamalai Jayaraj Karthik Krishnan

Index.................................................................................. Page No.

Global EV market: Poised for strong growth

Indian EV market: Everything needs to be done

Likely EV path in India: Three-wheeler  Two-wheeler  Intra city

Auto component companies: Engine & Transmission component

Impact on other sectors

How to play the theme

Based on current product profile, we suggest investors to keep track of

Annual Global Light Duty Vehicle Sales Estimate

Source: Bloomberg new energy finance

BYD (China) 13%

Source: Industry, B&K Research

For environmental reasons, many countries have announced significant EV targets

Source: IEA (International Energy Agency)

LiB battery cost

Weighted average battery pack price and indicative ranges (US)

Significant drop in LiB

Source: Industry, B&K Research

Price breakup for Lithium batteries

US$ per kWh

Source: Industry, B&K Research

LiB battery – capacity expansion

Battery capex plan of global majors

Giga LiB battery facilities

Source: Cairn ERA

Source: IEA, B&K Research

Charger types and global charging infrastructure

Typical time to charge the battery by charging type

Source: Industry, B&K Research

Source: Industry, B&K Research

EV plan by global players

Source: Industry, B&K Research

The EV plan by global auto majors:

Source: NITI Aayog * BAU - Business As Usual

Plan by NITI Aayog

Source: NITI Aayog

Incentives and Initiatives in India for EVs

Incentive per vehicle under FAME scheme

Concessional GST rates

Source : Industry, B&K Research

Purchase of 10,000 Electric Vehicles by EESL

Charging infrastructure in India

Charging infrastructure across India

Source: Industry, B&K Research

Potential EV path in India: 3W → 2W → Intra city Buses → Taxis →

Average annual cost of ownership for commercial three-wheeler

Source: B&K Research

With Government push on charging infrastructure development, we believe EV adoption

Source: B&K Research

MHCV – Intra city buses could go electric

Average annual cost of commercial ownership of PV

Source: B&K Research

Average annual cost of private ownership of PV

Source: B&K Research

Major OEM’s working on Electric PV/Hybrid space