Auto OEMs likely to invest $323 billion by 2070 on EVs: CSI report

The report further projected that EVs could add $9.6 trillion in OEM revenues by 2070, with cars being the major contributor from 2030 onwards

Automobile original equipment manufacturers (OEMs) are likely to invest $323 bn by 2070 to de-carbonise the transportation sector, and electric vehicle (EV) sales could add $9.6 trillion to OEM revenues by that time, according to a recent report by the Climate and Sustainability Initiative (CSI).

 

The Singapore-based CSI, an international organisation committed to decarbonising the economies of Asia and Africa, said in the report titled "India’s Auto Industry: Mapping the Course to Net Zero by 2070" that achieving net zero targets by 2070 will require an increase in investment from $7 billion in the five years ending in 2025 to $70 billion in the five years ending in 2070.

 

“The largest share of investments — amounting to around $263 billion until 2070 — is likely required in the four-wheeler category. Additionally, truck manufacturers are anticipated to invest over $45 billion by 2070 to meet domestic demand,” the report said.

 

The report further projected that EVs could add $9.6 trillion to OEM revenues by 2070, with cars being the major contributor from 2030 onwards. By 2030, it is estimated that EVs will contribute 7.5 per cent of the total OEM automobile sales revenue. “After 2030, we expect cars to become the largest revenue contributor, contributing over USD 8 trillion in sales during 2020-2070, accounting for 83 per cent of total EV revenues,” the analysts said. 

 

Vaibhav Pratap Singh, executive director, CSI, told Business Standard that batteries and drivetrains account for 50-70 per cent of an EV’s total value. “On an ex-factory basis, EVs across categories can cost between 70 per cent and 200 per cent more than traditional internal combustion engine (ICE) vehicles. For example, the ex-factory price of a mass-produced ICE scooter in India is around Rs 70,000, while similar top-tier EV scooters range from Rs 120,000 to Rs 130,000,” he said. With lower taxes, and other benefits like lower or no RTO registration fees etc., two-wheelers and three-wheelers are more competitive, while four-wheelers cost higher due to larger batteries.

 

Singh added that industry expects battery prices to drop below $100 per kWh by 2030 and that ICE vehicles will become more expensive to produce due to increasingly stringent emission norms. By that time, EVs could achieve greater price parity on an ex-factory basis, he felt.

 

CSI has created two scenarios for tax collection — at the current rate of 5 per cent, and another at 28 per cent, which is the current tax rate for conventional ICE vehicles.

 

The tax collection potential is highest for cars at $3.2 trillion of the total $4.1 trillion for the entire automobile sector. This calculation assumes a flat 28 per cent GST on the price, including the dealer margin. Continuing with the current rate of 5 per cent, GST collections from EV sales may add a total of $502 billion to automobile sales-related collections by 2070.