Investors, who are looking at the electric vehicle (EV) space in India, are making a beeline for start-ups or MSMEs (micro, small & medium enterprises) that focus on developing motors, controllers, and transmission systems for electric two-wheelers (E2Ws), said Thiru Srinivasan, Senior Advisor – Electric Vehicle Sector, FameTN, a trade and investment promotion agency of Tamil Nadu Government for MSMEs in the State.
“If you are an E2W OEM and are looking for funds, you may not get it easily. Investors are looking for very good EV component companies to put their money in. If one is running a good E2W motor company, the chances of getting the funds are much higher. This is the trend now,” he said.
Among 350-odd E2Ws, there are 20 prominent E2W OEMs in India. For these 20 players, there is hardly any Indian company that produces motors, controllers, or gears for E2Ws.
Imported motors
Most of the motors for E2Ws are either imported or assembled here with imported technology and controllers are also imported. Drivetrains account for 18 per cent of the E2W’s cost (batteries account for about 45 per cent).
So, the key opportunity or the majority of the value for the EV start-ups and others is not in becoming another OEM, but in the key component space – motors or special motors for E2Ws. Also, by making more efficient motors than what is available now, it will be possible to reduce the battery size in the vehicles.
“I have been urging policymakers to push for support to the motor industry and making them aware that improving the motors allows you to reduce the battery dependency,” said Srinivasan.
“At the State government level, there is an MSME-driven focus on building an innovative motor manufacturing ecosystem. For example, the Coimbatore region has a strong potential for motor technology. We are in deep discussion with MSMEs there and the government is willing to put in some money to create a common facility centre for us to develop motors,” he added.
Interestingly, motor manufacturing is a very well-established industry in the country. The industry, spread across Tamil Nadu, Gujarat, and other States, currently makes motors for pumps, washing machines, and a slew of other industries. But most of them are AC motors or induction motors.
EV opportunity
To cash in on the opportunity in the EV space, companies need to adapt to make magnet-based motors, necessary for EVs (traction motors).
There are two types of motors in an EV – mid-drive (or mid-frame) motors and in-wheel motors (hub motors). Currently, 70 per cent of the E2Ws sold in the country use hub motors, which are imported from China, where they use hub motors for low-speed vehicles. While the remaining 30 per cent of high-end E2Ws in India use mid-frame motors.
But hub motors save a lot of space which could be used for putting a large battery or some goods. Consequently, storage space under the E2W seat has increased from 20 litres a couple of years ago to 40 litres now and can go up to 50 litres.
“A good hub motor will simplify the whole EV and provides more space, while a frame motor adds more complexity. Even though hub motors have some challenges, if someone can make it more efficient and lighter in weight, the EV industry will quickly adopt the same,” he said.
However, the Indian market needs hub motors, which should be lightweight, compact, and high-performance (60-90, 90-120 kmph). The industry needs to shift away from slow- and medium-speed vehicles to high-speed vehicles. “This is the only way to counter Chinese competition and also grow exports,” said Srinivasan.
Two-wheelers are the biggest opportunity, as they account for 81 per cent of vehicles sold in the country. It complements public transport (with three-wheelers) on congested roads. India sells about 25 million two-wheelers a year. Though the number dropped during the pandemic, it is coming back to pre-Covid levels gradually. Also, there are 200 million two-wheelers on the road. Despite this, the annual two-wheeler sales are expected to increase to 60 million for the domestic market and another 60 million for exports by 2030.