Indian Economy News

Electric vehicles to drive auto capex up by Rs 70,630 crore in 5 years

Automobile manufacturers, both new and old, as well as auxiliary suppliers, are expected to spend a total of Rs. 70,630 crore (US$ 9.09 billion) over the next five years either entering or expanding their position in the electric vehicle category. According to data drawn from company announcements, India, the world's fifth-largest vehicle market, is set to get one of the largest capital expenditure pushes ever to fuel the switch from internal combustion engines to electric motors and batteries as part of a green drive.

Three carmakers are spearheading the EV-related Capex drive: Tata Motors' subsidiary, Tata Passenger Electric Mobility, which has set aside Rs. 15,000 crore (US$ 1.93 billion) over the next three years, Suzuki Motor Corp has plans to invest Rs. 10,445 crore (US$ 1.34 billion) from now till 2026, and Hyundai Motor India has plans to invest Rs. 4,000 crore (US$ 515.19 million) till 2028. Both newcomers and established two-wheeler manufacturers are investing in capacity expansion and new product development.

President of the Car Component Manufacturers Association, Mr. Sunjay Kapur, stated that auto component manufacturers' investment cycle to prepare for electric vehicles has already begun. He claims that the 75 companies that qualified for the auto components PLI plan must invest Rs. 18,600 crore (US$ 2.39 billion) over a five-year period. The last major capex push in India's automobile sector was not long ago: vehicle manufacturers and component suppliers are believed to have spent a total of Rs. 40,000 crore (US$ 5.15 billion) to upgrade from Bharat Stage IV to VI emissions standards, which went into effect on April 1, 2020.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.