The Impact of Lockdown Extension on Electric Vehicle(EV) Market

The Impact of Lockdown Extension on Electric Vehicle(EV) Market

Since March 24, 2020, the novel coronavirus pandemic has put brakes on India’s manufacturing industries due to the 21-days complete lockdown across the nation. The coronavirus outbreak is having an unanticipated impact on every sector due to disruption in the supply chain and production. Many sectors like Electric Vehicle(EV) Market had planned things once the lockdown would be over.

This week, Prime Minister Narendra Modi announced the extension of lockdown till May 3, 2020. As the extension was announced, things have begun to look sceptical for various companies across industries. Due to lockdown, the manufacturing and mobility services economy has collapsed but there is still a ray of hope for the electric vehicle market in India. EV market is less impacted since the EVs do not have a large audience as compared to the traditional auto industry in India but still it’s going to affect this sector.

The lockdown has forced the people to avoid travel which has consequently hampered people's appetite for new purchases. Especially costly ones such as a new car. This has resulted into great loss in electric vehicle industry. This impact is going to last for months even after the virus is contained.

At the same time, due to the extension of lockdown, the electric vehicle owners might expect service issues post lockdown and might even have to arrange the charge and discharge of their vehicles. The same goes for petrol and diesel vehicles as well for their lead-acid starter batteries. So, the problems will be on both ends.

At the same time, due to the extension of lockdown, the electric vehicle owners also might expect service issues post lockdown and might even have to arrange the charge and discharge of their vehicles themselves. The same goes for traditional petrol and diesel vehicles as well for their lead-acid starter batteries. Many industry experts suggested that the government should use this extended lockdown period to create an exit plan.

SMEV says Lockdown Extension is the Right Move

Society of Manufacturers of Electric Vehicles (SMEV) - the registered association representing Indian manufacturers of electric vehicle & its components, said that extension of the lockdown is the right move taken by government. Yet, there will be certainly an adverse impact on the operations of its members for the next 1-2 months.

SMEV Director General - Sohinder Gill describing the situation as a testing time for the whole EV industry. He also said that it is also time for its members to conserve cash, take care of workmen and utilise this time to plan ahead once the lockdown is over. Even though extension of lockdown is going to affect EV market and startups, Gill has expressed confidence that the EV industry will be able to spring back into action to recover the losses due to this shutdown.

Sohinder Gill said in a statement, "Looking at the current situation in the country, the extension of the lockdown is the right move. Though there will be certainly an adverse impact on the operations for the next 1-2 months, I believe that we will be able to save lives of thousands and emerge as a healthier nation. I appeal to all the stakeholders in EV companies to conserve cash, take care of our workmen and utilize this time to plan ahead."

Most of the Indian electric vehicle (EV) industries are dependent on China for import of cells, battery and other electronic components and sensors used in electric vehicles.The EV companies & startups had initially started feeling the heat when coronavirus broke out in China and they faced component shortages. Now China is reportedly getting back into action, but manufacturing in India is still under lockdown.

What Experts have to Say about this?

Co-founder, CEO, Ather Energy - Tarun Mehta, "The lockdown has certainly disrupted the local supply chains and manufacturing. While demand will come down across all categories, EVs have a smaller audience in India and the impact may be lower than conventional automobile industry. The products and manufacturing aside, financing options for consumers will take precedence to enable new sales in the coming months."

Recently, research firm Wood Mackenzie has released a report where it predicted a 43 % contraction in the global EV industry by the end of 2020. The EV sector had just building up some serious momentum but the crisis couldn’t have come at a worse time. The big hope now is that government plans will continue to push for more electrification of the transportation sector. According to sources, sales of electric vehicles in 2019 had topped with 2.2 million sales but now this number is expected to drop by 43% to 1.3 million by the end of 2020.

Vikrant K Aggarwal, director at EVI Technologies, also said that the entire auto sector is currently witnessing a 10% slowdown in sales. It has affected the electric vehicle industry the most as its compound annual growth rate (CAGR) is bound to suffer due to slow down in new bookings. Since the market size of electric vehicle in India is very small and thus just 1% of the total motorized vehicles run in India. Hence, EVs sector’s growth require constant nurturing.

Sharing the ground reality of the industry, managing director at Magenta Power - Maxson Lewis said that the demand for electric vehicles is linked to overall auto demand which has been and will continue to be impacted for months. This will push the electric vehicle business investments plans out by months. Further, Lewis said that possibly this extended lockdown could also mean that traditional auto may look towards electric vehicles as the reset plan.

Also Read: 12 Founders Shared Opinions on Strategies to Fight with Situation if the Lockdown Continues

Impact on EV Sector of Other Countries

The effect of the outbreak on the world's biggest EV market -China, are already visible. Electric car sales there fell by 54% by the end of January when the epidemic really took off in the country. February sales figures are expected to be even worse, with a decline of 90%. EV sales in Europe was really an impressive that increased up by 121% on the year in January. Then, due to coronavirus outbreak, it put brakes on this.

Electric Vehicles may rise in demand after COVI-19
People might turn to EVs after the Pandemic

By now, it should be clear to everyone that the fallout of the coronavirus pandemic is killing both the energy and transportation industries all over the world. Now, three months after the COVID-19 originated, China is slowly restarting its economy despite a second wave of infections knocking on its door. Europe, the second biggest market for electric cars, is in the impact of the coronavirus and the countries are seeking ways to restore their economies.

Several Governments are Taking Efforts

Many governments across the globe have already devised plans to grow the EV market once the pandemic is under control. The electric vehicle supply equipment (EVSE) market is predicted to witness a 10.7% CAGR during the forecast period 2020-2025 to see an increase in its revenue from $1.5 billion in 2019 to $2.7 billion in 2025.

Apart from this, the global market is being positively impacted by the increasing sale of electric vehicles. The investments by manufacturers have increased in last 4-5 years and government support for installing such charging stations has also increased. EV battery costs are expected to be nearly halved by 2025. There are several factors that have contributed to this growth and many EV players believe that these factors will eventually lead to the exponential growth of electric vehicles.

The government of several countries are taking efforts to install EV charging stations. For instance, the South Korean government has targeted the deployment of 10,000 fast chargers by 2022. Similarly, India has plans to install 2,700 charging stations by 2023, in cities with more than 4 million residents. In the same the same way, Canada sanctioned $4.6 million for the installation of 92 DC chargers, while the Californian government has proposed a funding of $900 million for the deployment of 250,000 charging points by 2025.

Also Read: How Different Sectors will Resume their Operations after Lockdown?

At present, India is still in the early stages of adoption. According to a report, the electric vehicle adoption rate is less than 1%. However, over the last two years, there has been a significant development in the electric vehicle space in India with both two-wheeler and four-wheeler launches. The government’s target of 30% electric vehicle adoption by 2030 is projected to be powered primarily by electrification of two-wheeler, three-wheeler, and commercial vehicles in India.

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