POWER

Big OEMs unlikely to invest electrification technology in short term: IND-RA

The big original equipment manufacturers (OEMs) of two-wheelers and passenger vehicles, despite having robust balance sheets, are most likely to shy away from short-term investments on electric vehicle technology.

Among the reasons for this delay, according to India Ratings & Research (Ind-Ra), a Fitch Group company, are the COVID-19–driven economic slowdown, the absence of strong government policy, the corporate focus on meeting regulatory requirements and new product launches, and consumer resistance because of the high cost of electric vehicles (EVs).

However, industry leaders say that they are investing for the long-term though they are not very aggressive in the short-term Capex plans.

The agency estimates that larger OEMs are waiting for a government policy, like the Delhi State policy, to incur heavy material Capex. However, both the OEMs and the auto ancillaries would continue to invest in small startup entities or collaborate with foreign partners.

Though many of these OEMs are having robust-balance sheets, the two years of slowdown has forced them to reduce capital expenditure (8%-9% of FY15-FY20 revenue).

Source
ET energy World
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