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"Success For Indian EV Start-ups Depend On Local Innovation" Amid reports of Tesla incurring loss has created a doubt about the success of small or new start-ups in a world where a well know manufacturer is struggling in different markets including China.

By Priyanka Tanwer

Opinions expressed by Entrepreneur contributors are their own.

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Photo Curtesy: Freepik

Start-ups have played a crucial role in the rise of EV globally and especially in India. When we look at sales of electric two-wheelers in India in FY24, 7 out of the top 10 brands are OEMs that were not in the vehicle manufacturing business but were part of the larger automotive ecosystem, experts say.

When we talk about electric vehicles, there are more start-ups that are emerging not only in India but also in other countries. When compared, there are more start-ups in EVs space than big corporate brands in the automobile sector who have ventured into the space. Overall, one can say the electric vehicles sector is standing on the shoulders of start-ups which are coming up with new technology every now and then.

According to Niti Aayog, there are 399 electric vehicle start-ups in India. NITI Aayog aims to achieve EV sales penetration of 70 per cent for all commercial cars, 30 per cent for private cars, 40 per cent for buses and 80 per cent for two and three-wheelers by 2030.

Notifying that the industry is on the right track, a recent report, suggested that EV sales in India are expected to rise 66 per cent this year after nearly doubling in 2023 as the state subsidies help fuel demand and supporting infrastructure comes up in the country.

However, amid reports of Tesla incurring loss has created a doubt about the success of small or new start-ups in a world where a well know manufacturer is struggling in different markets including China.

Speaking on the same Atul Jairaj, Partner, Consulting, Deloitte India said, "In many ways, start-ups have helped disrupt the space and attract a solid share of early adopters. Not just as OEMs, there are many start-up success stories around the overall EV ecosystem – be it around batteries, mobility enablement or fintech."

"This is also primarily due to the enhanced interest in this space and the push from government. Of course, one would expect legacy OEMs to use their strong manufacturing and distribution capabilities to gradually enter and gain share, and hence consolidation of players is inevitable, of which we are already seeing signs of," he added.

Sandiip Bhammer, Founder and Co Managing Partner, Green Frontier Capital said that Tesla's issues in China don't necessarily mean similar outcomes for Indian EV start-ups.

He said the Indian market's unique dynamics could allow these start-ups to establish their own niches. However, competing with foreign giants can prove to be tough, particularly with lower import duties favouring these companies. Success for Indian companies will depend largely on leveraging local insights and innovation in technology, pricing, and service.

"EV start-ups are showing promise of healthy growth, scaling of operational capability and access to sufficient investment capital. A robust ecosystem of battery manufacturers and other related sectors is also emerging to support these ventures," he added.

According to AutoForecast Solutions, an industry research and forecasting group in USA, many of the companies that have tried to bring products to market or go public, especially through Special Purpose Acquisition Companies, or SPACs, are struggling. At least 30 EV companies have either suspended their operations, gone quiet or faced the risk of bankruptcy in the last decade. On the other hand, India has not witnessed any shutdown of a company involved in manufacturing of electric vehicles.

Chetan Maini, Co-Founder & Chairman, SUN Mobility said that while global players may encounter challenges, the Indian landscape presents fertile ground for indigenous start-ups to flourish, buoyed by recent supportive measures bolstering their competitiveness.

"India's role in the EV sector is undergoing significant transformations, fueled by government initiatives like the FAME II subsidy scheme, with potential prospects for FAME III. These initiatives play a crucial role in nurturing the development of EV startups, providing crucial support for innovation and market expansion," he added.

Echoing the same, Dinesh Arjun, CEO and Co-founder, Raptee said, "Overall, I am very bullish on homegrown start-ups in the EV Space. The 2W space in India is very different from overseas markets not only in terms of product requirements but also on how and why they are purchased. Numbers in the EV 2-Wheeler space also indicate that domestic players including new-age OEMs leading in terms of market share."

I believe we are just getting started. In the 4-Wheeler space, Indian brands hold over 80 per cent market share and this is expected to continue. This is despite decent competition from overseas players, he continued.

Meanwhile, speaking on Tesla's loss, Chief Executive Officer, Aditya Singh Ratnu, Zevo India said that the recent struggles of Tesla in China underscore a significant opportunity for Indian EV startups. Despite Tesla's influence, hype, and marketing, all these issues in maintaining market share in the world's biggest EV market amidst aggressive local competition highlight the importance of combining local expertise with robust government support.

"Certainly, I believe India is making significant strides in the electric vehicle (EV) sector, demonstrating remarkable progress rather than stagnation. For me, it's clear that India is on a path to becoming a significant player in the global EV landscape, driven by a potent mix of heritage and innovation," he added.

Priyanka Tanwer

Feature Writer

With eight years of experience covering various beats for the digital and print media, now covering electric vehicles and sustainability for Entrepreneur India, keeping a nose for innovation and new technology in this futuristic sector.     

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