Home / Auto News / Inside the green rush: Why ambitious businesses are angling for piece of EV pie

What do a textile businessman, an electrical cable maker, a firm that makes building construction material and a company that resurfaces airport runways have in common? Each of them wants a piece of the EV (electrical vehicle) pie.

In Rajasthan, Riju Jhunjhunwala of the LNJ Bhilwara Group sees electric vehicles as the next lever of growth for the company. In Mumbai, Hemant Kabra wants to diversify his family business of wires, cables and switches into making electric scooters. In Delhi, Mithilesh Jain wants to cash in on his mechanical engineering degree by steering his family firm KL Group from road construction to manufacturing electric vehicles. In Ahmedabad and Hyderabad, Mohal Lalbhai and Vamsi Gaddam want to plug the one big gap in India’s two-wheeler EV landscape— motorcycles. Lalbhai’s family owns Arvind Ltd, one of India’s biggest textile firms. Gaddam’s family owns Visaka Industries, which makes construction material like corrugated cement sheets.

The green rush
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The green rush

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The switch from internal combustion engines (ICE) to electric vehicles in the $120 billion domestic automobile industry is inevitable, given the green transition India has committed to. For several businesses, this is also an opportunity of a lifetime. Not only is the 100-year-old industry being reset, it is suddenly a level playing field. New technologies are evolving and expertise in the old doesn’t matter anymore, removing high entry barriers. “It is an opportunity for both existing and new industry participants to innovate and capitalize," says Jagannarayan Padmanabhan, director of Crisil Ltd.

Crisil estimates that in the next five years, the EV sector in India will provide an opportunity worth almost 3 trillion. This includes potential revenue of about 1.5 trillion across vehicle segments for original equipment and component manufacturers; and about 90,000 crore in the form of disbursements for vehicle financiers. Shared mobility and insurance would account for the rest. For any smart and ambitious businessman, this is too big an opportunity to let go.

Garments to batteries

Riju Jhunjhunwala, 43, represents the third generation in Rajasthan’s LNJ Bhilwara Group, a household name in textiles in that part of the country. The group, with an estimated turnover of $ 1 billion (FY22), was started by his grandfather in Bhilwara in 1961. Over the years, it diversified into the graphite electrode business and hydropower. The pivot to EVs came last year, when it formed a joint venture with Pune-based Replus Engitech.

“We have three different businesses, textiles, graphite and power generation. We continue to grow in the first two, but we also realize that the times are changing," says Jhunjhunwala, who is the vice-chairman of the group. “The next 10-15 years will see a big growth in technology, EVs and artificial intelligence. We must have a presence in some of these areas."

LNJ Bhilwara Replus, however, won’t be making electric cars or two-wheelers. It will make the batteries that power all EV vehicles and account for nearly 40% of the vehicle cost. These batteries can be bought by either automotive firms or power companies for stationary storage purposes. A stationary energy storage system can store energy and release it in the form of electricity when needed—for example, the black box on a solar street lamp draws energy from sunlight through the day and powers the lamp at night.

India currently has a capacity to produce around 16 GWh (gigawatt-hours) of such batteries, with EVs accounting for around 10 GWh. By 2030, this is estimated to grow to at least 500 GWh—of this, 350 GWh will come from EVs. Jhunjhunwala says he aims that batteries should account for 20% of revenue in the next 5-7 years. “We may not be a very large player but we want to be known as leaders in adapting to new technologies," he adds. “Speed and agility will be key. If big players have to switch between technologies, we should be able help them do that extremely fast and at the lowest possible cost."

The missing bike

India’s domestic electric two-wheeler market stands out for two features: the overwhelming dominance of scooters and the near absence of motorcycles. From Bhavish Aggarwal’s Ola Electric to Swapnil Jain and Tarun Mehta’s Ather Energy, Naveen Munjal’s Hero Electric to Jeetender Sharma’s Okinawa, most manufacturers have rolled out scooters.

Even legacy firms like TVS Motor and Bajaj Auto, which have a motorcycle-heavy portfolio in the ICE segment, are yet to launch any electric motorcycle. They have one electric scooter each. Market leader Hero MotoCorp has entered the electric segment, also with a scooter. Not surprising then, scooters account for over 90% of the EV two-wheeler market.

In the conventional two-wheeler market, motorcycles are, however, the dominant force with over 60 % share. What explains this contrast? The answer lies in China.

“China is a big market for scooters. The Indian market has followed suit because of the supply chain in China. Anybody can make a few trips there and you will get whatever it takes to make a scooter," says Vamsi Gaddam, 33, founder and CEO of the Hyderabad-based Atumobile. “But, from the start, we have been interested in bikes. We see a lot of opportunities there."

Visaka Industries began producing corrugated cement sheets in the 1980s. It later pivoted to making integrated solar rooftop systems and is one of the largest in the business today. It had an estimated turnover of 1,400 crore in FY22. Inspired partly by the success of Tesla’s Elon Musk and then by his own passion for automobiles, Gaddam set up Atumobile in 2019

Lalbhai, 32, claims to have never shown interest in his family business. With a turnover of $ 2 billion, the Lalbhai group (which includes Arvind Ltd and Atul Ltd) is one of the oldest enterprises in India – and is managed by Lalbhai’s cousins. A graduate in material science and engineering from University of Sheffield, he has, instead, kept a close watch on the green transition in automobiles. “Around 8-9 years ago, when lithium-ion prices starting falling, it started making (business) sense," says Lalbhai. “In the next five years, a significant jump is going to take place and it is an opportunity that we cannot miss." Lalbhai’s company Matter plans to make in-house batteries as well as a range of electric two-wheelers. The company is expected to unveil its first electric motorcycle later this week. “I strongly believe that e-motorcycles will change the game in India," he says.

Lalbhai plans to tackle one of the biggest issues with electric two-wheelers in recent times—safety. Underpinning Matter’s products would be patented liquid cooling technology for batteries, a first for India. A coolant like water or a refrigerant will be circulated in a network of tubes that is wrapped around the battery to keep it cool. “India has a climate that ranges from one extreme to the other and heat is an issue. (Liquid cooling) is a solution that we have deployed," he says.

Already, the electric two-wheeler space is getting crowded with the likes of Ola, Hero Electric, Okinawa, Ather Energy, Ampere jostling with traditional heavyweights like TVS and Bajaj. Lalbhai’s entry may seem belated but he believes the market still has space for good quality products. “We are not in the business of just assembling vehicles with components from neighbouring nations. We have gone through the pain of testing and validation to ensure trials are not done at the expense of the consumer," he adds.

Low entry barrier

Mithilesh Jain, 32, was a mechanical engineering student when the automobile bug bit him in 2012. The family-owned, KL Group, is a fledgling cash generating petrochemicals and construction business, which included making airport runways. When the time came to diversify, Jain was insistent that EV was the way to go. So, they took up a Hero Electric dealership in 2016 in Rohtak, Haryana. “We became the #1 dealer for them for three years," Jain says. “That gave us the confidence to start eRise in 2021."

For a group that has no experience in manufacturing, it is a big step but Jain believes it is a low-risk high-reward strategy. “If we succeed, it can take the group to the next level. We have hands-on experience in the service aspect of the business," he adds. “The industry is highly unorganized but the scope for expansion is huge."

In Mumbai, Hemant Kabra, 35, of RR Global considered other options before zeroing in on EVs for diversification of his family business. The company started in the early 1980s and now has an estimated turnover of $ 1.25 bn (FY22). From winding wires in Silvassa, it has expanded to produce electrical equipment like wires and cables, switches and lights. Kabra is now spearheading the ambitious foray into EVs.

“We looked at the waste-to-energy and industrial chemicals business as well but the former demanded high capex. The industrial chemicals segment is also very highly concentrated," Kabra says. “In contrast, the entry barrier in EVs is low and the potential is huge. Even if we get a 5 % share in the market in the next 3-4 years, we will have a $ 1 billion business."

Unlike Gaddam and Lalbhai, Kabra wants to stick to scooters. But he is betting on models with big wheels—a cross between a traditional scooter and a motorcycle. “The battery requirement in a scooter is small which makes them more competitive in price. Motorcycles need more power, but a bigger electric motor and battery will push up the cost. Motorcycles will take off in EVs, too, but India is a value-conscious market so scooters will remain the mainstay," he says.

RR Global has launched a scooter with 16-inch wheels (for comparison, Honda Activa has 12-inch and Hero Splendor has 18-inch wheels). “It offers more grip and comfort but is not as expensive as a motorcycle," he adds.

Road Ahead

There are potential pitfalls though. Already, the domestic EV industry is crowded. Even if the pie gets larger, it will not be able to support so many players. Some are bound to die out in a consolidation phase that may begin as early as next year. “In a mature market like China or Europe, there are over 50 brands of batteries. But the top 10 control 80% of the market and about 40 players fight for the rest," says Hiren Shah, executive director and CEO, Replus Engitech. “It will be very similar here. You’ll see very large players in the top five controlling the majority of the market. There will be large battery companies pumping in money, and there will be some like us riding on technology, innovation and new cell chemistries. That is how the market will evolve," said Shah.

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