Focusing on the EV ecosystem will be more
beneficial rather than focusing on auto companies.
Charge up and gear up – it's time to
explore the exciting world of EVs or electric vehicles!
Electric vehicles are no longer a thing of
the future. They're here. And they're here to stay.
From charging infrastructure companies to
component manufacturers, the electric vehicle ecosystem is a complex and
rapidly evolving landscape.
In this blog, we'll take a deep dive into
the ins and outs of the electric vehicle world, the technology, and explore the
opportunities and challenges ahead.
The important thing here is to focus on the
EV value chain and not just pure play auto stocks making electric cars.
That's because auto companies are juggling
too many balls in the air right now.
By taking a closer look at what makes
electric cars truly one of the most disruptive forces, you could find some
wealth creating opportunities along the way.
So, here we go…
Charging infrastructure: crucial part
of the EV ecosystem
Believe us when we say that charging
infrastructure is a crucial aspect of the entire electric vehicle ecosystem. It
is set to grow exponentially as the number of electric cars on the road
increases.
This infrastructure includes both public
and private charging stations and enables EV owners to charge their vehicles at
convenient locations, such as at home, at work, and while out and about.
Without a sufficient charging
infrastructure in place, it would be difficult for people to own and operate
EVs, as they would have limited options for recharging their vehicles'
batteries.
Many Indian companies have opted to foray
into this space recently. For instance, real estate companies are setting up EV
charging points along with their home offerings. Even textile companies having
spare manufacturing plots have opted to make some components.
In our view, the biggest beneficiaries are
Tata Power and ABB India. These companies are changing the game and coming up
with new ways to introduce innovative products.
Additionally, all the charging
infrastructure companies also play a vital role in the government and private
sector initiatives to encourage EV adoption.
In order for the electric vehicle ecosystem
to thrive, it is important that sufficient charging infrastructure is in place.
Chemical companies and the EV
ecosystem
Chemical companies supply many of the
materials and chemicals that are used in the production of EV components, such
as batteries, electric motors, and charging infrastructure.
One of the key areas where chemical
companies are involved in the EV ecosystem is in the production of battery
materials. Batteries are a critical component of EVs, as they store the
electrical energy that powers the vehicle.
Many different chemicals are used in the
production of EV batteries, including lithium, cobalt, nickel, and graphite,
which are typically sourced from chemical companies.
Chemical companies also play a role in the
production of EV components other than batteries. For example, they produce the
raw materials that are used to make the electric motor, such as copper and
neodymium, which are used to make the magnets.
They also produce materials that go into
the production of the charging infrastructure, such as the conductive materials
used in the charging cables and terminals.
In addition, chemical companies play an
important role in recycling end of life batteries.
From the listed space, Balaji Amines, Fiem
Industries, Gujarat Fluorochemicals and Tatva Chintan Pharma could be the
biggest beneficiaries.
EV batteries – the heart of electric
vehicles
Without battery OEMs or battery makers, EVs
would not be able to function, making them a critical part of the ecosystem.
These batteries are made up of a
combination of materials such as lithium, cobalt, nickel, and graphite which
are sourced from chemical companies. Battery makers take these raw materials
and produce the battery cells, packs and modules.
As the demand for EVs continues to grow,
battery manufacturers are working to improve the energy density, safety, and
overall performance of their batteries. This includes investing in research and
development to improve the energy density and safety of their batteries, as
well as reduce the cost.
Battery manufacturers also play a vital
role in the recycling of batteries.
From the entire EV ecosystem, battery
makers present the most promising opportunity as the cost has come down drastically.
It is expected to come down even more in the coming years!
Two listed companies which capture most of
the market share are Amara Raja Batteries and Exide Industries. But apart from
these two, a small company Kabra Extrusion has forayed in this space by
acquiring stake in battery startup.
These companies are at the forefront of
innovation at the moment and making heavy investments into new and upcoming
battery technologies.
EV component manufacturers: adopting
to newer technology and digitization
Do you remember when smartphones disrupted
landlines? It was not a matter of calling from anywhere or talking on the go
for that matter.
Smartphones became integral consumer
devices. Be it music, information, travel, eating habits, or shopping – they
completely changed our lives. The mobile phone revolution was beyond what
anyone could have imagined.
This particular segment of the EV ecosystem
is going through a similar revolution.
EV component manufacturers or auto
ancillary companies are adopting technology and digitization.
They are focusing on advanced engineering
through embedded software systems, telematics, connectivity, wiring harness
design and making light weight products.
From the entire auto ancillary landscape,
the companies which have an agonistic EV portfolio include Minda Corporation,
Minda Industries, Gabriel India and Sona Comstar.
Software companies providing
technology
The EV revolution is coming along with an
IoT revolution. It will piggyback on technologies such as sensors, vehicle control,
cloud computing, embedded software, data processing, and analytics.
The two Indian companies providing
technology for the EV landscape include Tata Elxsi and KPIT Technologies.
One of the key areas where these software
companies are involved is in the development of the software and control
systems that are used to manage the powertrain, battery, and other systems in
an EV.
These systems ensure that the various
components of the EV are working together effectively, and that the vehicle is
performing efficiently.
Additionally, software companies play a big
role in the development of fleet management and telematics software, which
enables fleet owners to monitor and optimize the performance of their EVs and
allows them to charge and schedule maintenance more effectively.
To conclude
The growth of the EV market is also
creating jobs, both in manufacturing and in the infrastructure segments.
It will help create a cleaner and
sustainable environment.
With the help of these companies working
together to make EVs more accessible, convenient and affordable, we will
continue to see a rapid growth in EV adoption.
Little do we wonder as to why India is paving
the way for EVs and focusing on reaching a high level of EV adoption by 2030.
Jhaveri Securities has a strong research team that is well qualifies to do a
research on emerging trends. Connect to any of our research team members to
gain insights on industry or companies.