Electric vehicle startups hit hardest by virus outbreak

The Covid-19 pandemic’s fallout is likely to hit electric vehicle (EV) startups the hardest, according to a new report, as they had invested heavily on growth but have hardly been generating any cash.

EV sales, like sales of traditional petrol and diesel-powered automobiles, are expected to remain subdued in the current fiscal year, and startups and small and medium enterprises that make up most of the sector “will struggle for survival”, according to the report on the state of the EV sector by Avendus Capital.

“A significant portion of the EV industry in India is represented by SMEs and start-ups. The Covid-19 lockdown is expected to affect this part of the industry the most,” it said.

Traditional manufacturers that have entered EV sector are also expected to turn away from the segment -- which makes up just 0.01% of India’s auto market -- and focus on reviving sales of traditional internal combustion engine (ICE) vehicles in the short term.

This would mean fewer new launches in the EV segment as manufacturers work to restore sales of their “bread-and-butter” ICE products.

Sales of three-wheeler and four-wheeler EVs will remain low, as consumer preference will shift towards personal mobility in the short term, hurting the market for cabs and auto rickshaws, which was expected to adopt EVs faster than retail consumers.

However, the two-wheeler EV segment could benefit from the pandemic, the report added.

Moreover, it said that while the pandemic might have pushed back EV sales targets by a year, the proposition for shifting to such vehicles could get stronger once the outbreak blows over.

ET Tech