Indian auto parts makers eye Chinese EVs as Western bets falter

The Ford Motor Co. announcement that it expects to write down $19.5 billion in EV investments—the largest impairment taken by a US automaker—has brought into the spotlight the commentary of at least two domestic auto parts makers—Sona BLW Precision Forgings Ltd (Sona Comstar) and Samvardhana Motherson International Ltd—on their ability to win the Chinese business.

In its 13 November investor presentation, Motherson’s leadership noted that the company is already working with seven out of the top 10 Chinese carmakers. “[We are] supplying to seven out of the top 10 local NEV (New Energy Vehicle) Chinese players [and] supporting Chinese OEMs (original equipment manufacturers) in their production outside of China," the presentation noted.

Sona Comstar, on the other hand, was looking at the opportunity with caution. “I think the opportunity in China, we will pursue with a very high degree of caution. What we can do with our existing plant in China, we will continue to address, as you know, we have a plant there," said Group chief executive and managing director Vivek Vikram Singh when asked if the company can strengthen its ties with Chinese OEMs to diversify its business during the 31 October earnings call.

In July, it announced a joint venture (JV) with China-based Jinnaite Machinery, officially known as Xiangyang Jinnaite Machinery Co. Ltd, to expand its presence in the market, but later put it on hold.

Singh, however, acknowledged that there was a good business rationale to pursue the opportunity if local dynamics changed, without elaborating on the hurdles within China, as joint ventures with Chinese firms for technology and manufacturing have often come under intense scrutiny for approvals.

“If things change, there are certain factors, the lead indicators, if they could change, yes, I think there is a business rationale to do it again. That's why our engagement with JNT is still strong. We will pick it up where we left off, but some things on the ground have to change before that," he said.

Ford's brutal EV lesson could very well nudge Indian auto suppliers to look East.

The EV breakdown

Western automakers are slamming on the brakes hard in their EV push. The US auto giant's announcement has come three months after Germany-based Porsche announced a delay in the rollout of its EV lineup, which will cost its parent, Volkswagen, about $6 billion, according to the management.

Several Indian players, including both Sona Comstar and Motherson, are suppliers to Volkswagen and Ford.

Along with the write-off, Ford has decided not to proceed with its electric pickup trucks and other large electric models. This cautious approach mirrors that of Porsche, which told reporters in September that it would delay the launch of several previously planned all-electric models.

“Rather than spending billions more on large EVs that now have no path to profitability, we are allocating that money into higher-returning areas," Andrew Frick, head of Ford’s petrol engine and electric businesses, said on a media call on 15 December.

The Donald Trump-led US administration’s decision to end tax credits for EVs and relax emission norms, combined with some automakers’ overestimation of EV demand in Europe, has caused this change of heart.

“The EU automotive segment’s outlook suggests modest improvement in CY2026E, with gradual recovery in segments, albeit with clear caveats," Rishi Vora and Apurva Desai of Kotak Institutional Equities wrote in an 8 December note. “The PV segment is likely to grow in the low single digits, led by electric segments where Chinese OEMs continue to gain share at the expense of EU OEMs."

The analysts noted that the US EV market enters 2026 without the strong policy-driven support. “With key purchase incentives phased out and mandates loosened or delayed, OEMs are recalibrating production to match natural EV demand rather than earlier aspirational targets," Vora and Desai wrote.

The Chinese fix

Western carmakers’ wavering EV commitment poses challenges for the electrification programmes of companies such as Sona Comstar and Motherson, which derive a significant share of their revenue from the technology.

At the end of the September quarter, Sona Comstar derived 30% of its automotive revenue from EVs, while over one-fifth of Motherson’s order book came from EV makers.

As these leading component manufacturers also generate business from other technologies, including hybrids, any potential impact from Western automakers’ retrenchment is likely to be limited to their EV programmes, which have been expanded significantly over the past five years.

The slowdown in EV push at major carmakers has already weighed on the companies, with Sona Comstar’s revenue from EV products declining by 22% year-on-year to ₹475 crore in the April-September period. Motherson saw the share of EVs in the total order book decrease to 22% at the end of the September quarter, from 24% at the end of the March quarter.

With this business setback, opportunities from Chinese carmakers have become even more critical.

Since the start of 2025, analysts have noted that the rise of Chinese carmakers has been a notable development across regions, particularly markets like Europe, where they are now making their presence felt.

In the European Union (EU), BYD holds a 3.1% market share in battery electric vehicles (BEVs). According to a 26 June Elara Capital note, its exports to the EU and the UK had nearly doubled year-to-date in 2025. “We believe China’s OEMs can gain incremental global passenger vehicle (PV) market share in the next three to five years, thereby putting pressure on legacy OEMs," the note said.

“Chinese entrants are best positioned to capture incremental volume growth through localization and technology cost advantages (in Europe)," Vora and Desai wrote. “Overall, this could be structurally negative for Indian auto ancillaries as well, unless they are able to capture market share with Chinese OEMs as well in the EU market."