Chennai: The depreciation of the rupee has started pinching electric vehicle (EV) companies in India as these have 40-45% imported components with a direct dollar link. Further, despite the EV boom, the comparatively smaller numbers mean that Indian electrics players do not have the price advantage that big auto OEMs have when sourcing microchips and semiconductor parts from global suppliers.

While EV makers are holding their prices for now, a round of markups are right round the corner if the currency fluctuation continues.

Society of Manufacturers of Electric Vehicles (SMEV) director-general Sohinder Gill said, “There are a number of components like cells, chips and permanent magnets that form 40-45% of the vehicle and which are imported, thereby having a direct effect due to the rupee volatility. As a result, there will be a 7-10% increase in cost pressure due to rupee depreciation on EV companies.”

EV makers say the margin pressure and supply disruption is beginning to affect production. Okinawa Autotech founder-MD Jeetender Sharma said, “There is no denying that the prolonged semiconductor shortage has acted as a deterrent for the fast-growing two-wheeler EV market. Unable to keep up with the demand surge, electric two-wheeler brands are seeing de-growth in sales.” Okinawa, he added, has been “planning much in advance” and its “suppliers have stocked lithium-ion cells to manage the crisis”.

The margin pinch is worse because most EV companies don’t have scale advantage. Altigreen Propulsion Labs founder-CEO Amitabh Saran said, “The rupee-dollar rate is having an impact particularly with sourcing semiconductor and cells for EVs. India still does not have a fab plant, so imports are necessary and hence the pinch. The question is while demand is good, how much can we pass on?”

Mahesh Babu, CEO of Hinduja Group e-mobility company Switch India and COO of Switch Mobility , said, “The current situation on semi-conductor shortage has shown overall signs of improvement in recent times after the lifting of curbs globally.” Switch Mobility, he added, does not have “much of an impact as we have secured supply for our contracts with at least a year ahead, though future contracts may see some impact.”

Courtesy:TOI