Electric vehicles are redrawing auto cluster boundaries

Electric vehicles have drawn increased attention in recent years with the government showing a focused intent to accelerate its uptake - In line with India’s commitment to move towards cleaner fuel pathways. As fuel prices skyrocket, consumers, who might not share these environmental considerations, are also now thinking twice before purchasing a petrol or diesel vehicle.

Regional governments are going further by assimilating this new emerging 'Electric Vehicle Revolution' into their industrial ecosystem by attracting manufacturers to their state through tax breaks and other key incentives.

A recent report estimates India's electric vehicle (EV) market to be a Rs. 50,000 crore (US$ 7.09 billion) opportunity by 2025, with two- and three-wheelers expected to drive higher electrification of the vehicles [1]. The last two years have seen a slew of states announcing major EV policies, including several calls for investments from the private sector.

This new era of clean mobility promises to bring funds, including foreign investments, and provide employment to their regions. In fact in just the last 7 months of 2021 the Indian EV industry has seen a flurry of investments in the  region of $3 billion .

The Indian automobile sector is the  sixth largest  in the world in terms of production and creates nearly  37 million jobs . The industry, however, is bound to undergo seismic shifts as India seeks to achieve its  penetration target of 30% EV by 2030 . Some of these shifts are already visible – new auto manufacturing players partnering with established Original Equipment Manufacturers (OEMs) and existing oil and gas players venturing into the charging industry to maintain their competitiveness in the industry.

As visible, there are bound to be significant shifts in the urban fabric of areas around these automobile clusters. But Electric vehicles and its whole ecosystem indubitably also add tremendous societal benefits in terms of  job creation, grid resilience, reduced healthcare costs and improved air quality.