EV Supply Chain: Need for Innovation to Strengthen EV Ecosystem in India
India set another remarkable record in June. We witnessed the highest ever half-year sales volume of electric vehicles, with nearly 4 lakh vehicles sold across all categories in 6 months. According to the Vahan Dashboard (maintained by the Ministry of Road Transport and Highways), India recorded a 333% year-on-year growth in electric vehicle sales during the same period last year. Despite the low share of EVs in total vehicle registrations (only 5%), trends clearly indicate that the EV revolution is well underway.
Conservative estimates suggest that the accelerated shift to electric mobility could result in a market potential of $206 billion by 2030. Many challenges await the electric vehicle industry to realize its full market potential. Nothing more pressing than the need for a robust system Electric vehicle supply chain at present.
The Pressure on the Electric Vehicle Supply Chain Every progressive country is pushing for rapid adoption of electric vehicles, driven by climate change and decarbonization commitments to a cleaner planet. Concerns about climate change, energy security and local air pollution caused by the use of internal combustion engine vehicles are major catalysts for change.
The total cost of ownership of electric vehicles is beneficial in the long term for fleet owners and customers. That said, EV manufacturers need to further reduce vehicle costs to compete with competitors. ICE counterparts. Currently, EV costs are increasing due to the cost of the battery, the single largest cost center in EV manufacturing. As customer demand grows, all EV components will achieve economies of scale, but will require a strong supply chain to allow production lines to run better.
When EVs reach volumes comparable to ICE vehicle production, they have the potential to significantly boost local manufacturing, generate new job opportunities and fuel India’s post-COVID-19 recovery. But unlike the traditional ICE vehicle supply chain, the electric vehicle supply chain is nascent and bottleneck-prone. Despite the reduced number of parts and a simpler mechanical design, mass production of electric vehicles remains difficult.
Fortification for the electric vehicle supply chain:
To give impetus to the manufacturing of electric vehicles, the government has rolled out several Emobility manufacturing policy frameworks such as FAME 1 and FAME 2, PLI schemes, scrapping policy and an incentive scheme related to the production by the firm in September 2021. Supply chain localization has received support through programs like Atma Nirbhar Bharat and Make in India, which could help the electric vehicle industry reduce its reliance on imports. Several Indian states have deployed EV Policy executives, but most of them have not considered 4W commercial vehicles, a gap that needs to be closed quickly.
Lack of R&D, safety and quality issues are some of the many challenges plaguing the electric vehicle supply chain. Rare-earth minerals used in electric vehicles, such as magnets in motors, silicone and lithium-ion batteries, are limited to a few geographies. India’s self-sufficiency in battery raw materials (Lithium, for example) needs a boost through the intervention of government dialogue and import policies. The pandemic has also exposed the soft underbelly of global supply chains, and the recovery phase is characterized by the priorities of established industries like consumer goods, retail and food.
Designing a supply chain of the future:
Challenges represent opportunities for innovation. A robust and flexible supply chain with a network of selected suppliers can help manage many risks related to logistics, purchasing inflation and supplier shortages. Manufacturers can also consider various options to reduce exposure and risk to their supply chain from those listed below.
1. We should all aim to design electric vehicles
If the EV ecosystem wants to change the script for the next 100 years, we have to create a product designed for the next 100 years. We have a chance to change mobility for the better and persist with yesterday’s manufacturing techniques; we will keep the same supply chain challenges in the past. Even today, half of the materials used in manufacturing are unnecessary and can be easily replaced when you create a product from scratch. Next comes sustainable manufacturing.
A host of new technologies, composite materials research and assembly innovations are enabling today’s manufacturers to reduce overhead, produce locally and reduce costs. When introducing design innovations in electric vehicles, the math is crucial. Understanding modularity and an integrated powertrain, battery pack, stress points, component fitment, fuel consumption relative to vehicle weight, and raw material shortages is essential.
There are ways to avoid using particular raw materials and rare earth minerals currently in short supply while still ensuring quality, introducing resilience to logistical time constraints. This can be done with proper design implementation, innovation and technological intervention.
2. Co-creation for better value
To better meet the mobility needs of the future, manufacturers of electric vehicles should break down the proverbial R&D wall between themselves, the customer and the supplier. This will help manufacturers prioritize the right features and build quality and usability of vehicles for all stakeholders in the ecosystem. By better understanding owners’ challenges, OEMs can create a product that creates a superior mobility frame that works in the field.
Co-creation is a great approach to help customers avoid upgrades, custom trims, and constant upgrades. The supply chain ecosystem benefits by reducing reliance on established manufacturing demand and encouraging innovation for new production techniques and processes. An inclusive knowledge transfer process to suppliers will see them rise to the challenge of delivering quality parts to manufacturers, helping them bridge the gap between established standards and the demands of the new EV ecosystem.
3. Digitization of the electric vehicle supply chain
Manufacturers can significantly reduce strategic decision-making time by adopting end-to-end digital supply chain platforms. Speed, cost savings and real-time visibility are significant benefits that digitization is bringing to supply chains. Data-driven recommendations for locating the supplier network, rewarding top-performing suppliers with better payment terms, and the ability to detect supply chain disruption from a mile away are the benefits of an approach digital. Supply chain visibility and real-time information through digitization will enable every stakeholder to access end-to-end transparency and better quality control.
4. Manufacturing made accessible, sustainable and profitable
Reinventing the electric vehicle supply chain also involves configuring manufacturing. Transporting goods and materials from multiple manufacturers and component suppliers to a central manufacturing hub is inefficient and time-consuming. The modular micro-factory concept aims to reduce logistics costs and the pressure it places on the supply chain. Modular micro-manufacturing units enable faster production readiness and encourage manufacturers to create localized supply hubs. Smaller units require far less real estate and have a minimized environmental footprint.
Since repair and reuse can increase the life of an electric vehicle, a circular manufacturing economy approach is the need of the hour. Refurbishing and refurbishing can have a more negligible environmental impact than new manufacturing, and recycling resources can reduce the need to extract new raw materials.
Maintain EV momentum
The country’s electric vehicle goals would require large-scale demand development through push-and-pull strategies. The manufacturing ecosystem also needs strong and consistent policy support. Now is a good time for OEMs and state and federal policymakers to work together to create an environment that can move electric vehicle manufacturing from the margins to center stage.
The answer we ultimately seek begins with acknowledging that there are shortages and always finding a method to build the future of mobility. Today, a well-coordinated strategy involving all parties is needed to address supply chain issues in the Indian market.
Disclaimer: The views and opinions expressed in this article are solely those of the original author and do not represent The Times Group or its employees.