The steep depreciation of the Indian Rupee against the US dollar in recent months has pushed up import costs for electric vehicle manufacturers in the country who are contemplating taking prices increases to offset it. Original equipment manufacturers (OEMs) depend significantly on importing key components required for electric vehicle manufacturing.
Companies manufacturing electric vehicles in India have stated that they are monitoring the fluctuation in the rupee-US dollar exchange rate as well as other major currencies and will be undertaking pricing corrections to mitigate the costs.
OEMs are dependent on imports of battery packs, traction motors and onboard chargers for the manufacturing of electric vehicles.
“In our electric vehicles, there is an import content that will become dearer as the exchange rate goes against the Indian rupee right now. So that’s something that we have to work through. We will have to work harder, so that the team delivers consistently, which is the product cost out that they’ve been driving,” said Amarjyoti Barua, Group Financial Officer of the Mahindra group in the quarterly results briefing.
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Experts state that the currency fluctuations could lead to a medium-term price impact on the electric vehicles industry in the country.
“While the immediate impact on component costs may be limited due to import insurance and long-term contracts that shield manufacturers from currency fluctuations, this is not a sustainable long-term solution. Battery and BMS alone account for 50 per cent of an EV’s cost, making the industry highly vulnerable to currency depreciation over time. A weaker rupee increases procurement costs, potentially impacting pricing,” said Nikhil Dhaka, Vice President of Primus Partners.
“Electric Vehicles are already priced higher than petrol and diesel vehicles, even a small change in exchange rates can make it even more expensive for the consumer,” Anshul Gupta, Managing Director of OPG Mobility.
Budget boost
As the union budget has announced the exemption of customs duty on raw materials including lithium and cobalt required to manufacture electric vehicle components, domestic production will be accelerated in the long term.
With the expansion in localization of electric vehicle battery manufacturing domestically, the costs would stabilize and reduce dependency on the volatile exchange rates noted Nikhil Dhaka.
“We have an integrated in-house manufacturing ecosystem where we produce key EV components like batteries, motors and controllers in India. This ensures cost stability, supply chain resilience, and reduced dependency on imports. We are investing in battery Research and Development (R&D) to develop more efficient and cost-effective battery technologies to counterbalance the cost escalation due to global market trends. The research is focused on developing high-performance, pocket-friendly battery solutions that optimise energy efficiency and reduce long-term ownership costs for consumers,” added Gupta
“With increasing localization efforts and strategic supply chain diversification, the industry is working towards mitigating the effect of such challenges,” said Yatin Gupte, Chairman & Managing Director of Wardwizard Innovations & Mobility Limited.
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