Auto component makers are pitching powertrain-agnostic portfolios as the best way to address uncertainty about which technologies will dominate roads amid the shift away from combustion engines.
Strategies put in place by companies like Greaves Cotton, Tenneco Clean Air and Belrise Industries suggest that suppliers need to either make parts that can be used across multiple powertrains or build capabilities simultaneously in electric, combustion, hybrid and CNG technologies.
The approach helps them stay relevant regardless of which technology leaps ahead, according to industry executives and experts. Their comments come as global carmakers such as Ford, Volkswagen and Stellantis slow their EV-only plans, while in India, automakers spar over policy priorities for EVs and transitional technologies like hybrids and CNG.
Hedge your bets
“You have to hedge your bets, or rather, you have to make sure you have activities in all [powertrains]. Even the OEMs are doing that,” said Parag Satpute, managing director and chief executive at Greaves Cotton, known for engine manufacturing and engineering.
“As an auto component company, in some ways, it's easier for us to do that. We are dealing in components; so, there's not a huge difference in the components when it comes between, let's say a CNG or a diesel or a petrol. The components are fairly similar. Their capabilities are fairly similar,” Satpute added.
India's premier energy efficiency agency, the Bureau of Energy Efficiency, has drawn up a clean fuel mix scenario for FY32 comprising multiple technologies, including hybrids, flex fuel vehicles, electric, CNG and traditional ICE engines, Mint reported on 20 February.
Arvind Chandra, chief executive at Tenneco Clean Air India, said the company will be prepared, no matter the course of technology evolution.
“What we're seeing at a high level is no matter how the pendulum swings, whether it swings to go back to full internal combustion engine, diesel, petrol vehicles, we are fine because we have enough content there in terms of emissions, after-treatment systems, etc,” Chandra said.
“If it swings the other way to electrification, great, because we can sell a lot more very expensive shock absorbers because these have to be electronically controlled,” he said, adding that hybrids will give the best of both worlds to the company’s business. Listed in November, Tenneco Clean Air is the subsidiary of American component major Tenneco Inc. It has a market cap of over ₹22,000 crore.
Across powertrains
Satpute of Greaves added that the company, which has a market capitalization of ₹3,580 crore, has also got access to products like gear shift systems, foot throttle controls, steering wheels and park brake cable, among others, which will be required across all powertrains.
The commentary from Greaves and Tenneco comes as some global automakers write off their EV investments and pivot towards hybrids.
In December, Ford Motor said it expects to write down $19.5 billion EV investments as it looks at a mix of technologies including EVs and hybrids, even as the Trump administration removes incentives for electric cars in the country. In February, Stellantis said it is taking a $26.5 billion write-off from its electrification investments as it pivots to bet on advanced internal combustion engines, electric vehicles and hybrids.
The auto giant's announcements come months after Germany-based Porsche announced a delay in the rollout of its EV lineup in September, which will cost its parent, Volkswagen, about $6 billion, according to the management.
Changing times
Pune-based Belrise Industries, which is looking to expand its business in the four-wheeler space, is taking note, stating most of the business it has currently comes from powertrain-agnostic products.
“If you see the bread and butter of what Belrise does, there's chassis, polymer parts, suspensions—all of those are power-agnostic. So, in effect, whether it's an EV or an ICE, our components go into both EVs as well as ICE,” said Swastid Badve, general manager, Belrise Industries. Belrise was listed in May last year, and is currently worth ₹17,540 crore.
A top Indian government panel set up by Niti Aayog said in a 10 February report that the clean fuel transition will be a phased affair, including multiple technologies like hybrids, flex fuels and CNG.
“The transition strategy should begin with the phased elimination of polluting diesel vehicles and the adoption of lower-emission technologies such as CNG, hybrids, and electric vehicles,” the panel said in its report.
Flexible approach
Domain experts argue that a flexible approach has become essential for auto component makers at a time when it remains unclear which technology will hold prominence in the next three to five years.
“Instead of making a binary bet on EV only components, many suppliers are investing in components and engineering capabilities that can serve ICE, hybrid and electric platforms simultaneously,” Harshvardhan Sharma, Group Head of Automotive Technology & Innovation at Nomura Research Institute Consulting & Solutions India, said.
“The transition to electrification will not be linear, particularly in markets like India where ICE, hybrid and EV technologies will coexist,” Sharma said. “In that environment, suppliers that are powertrain agnostic with products spanning multiple propulsion architectures are structurally better positioned to manage both demand uncertainty and technology risk,” he added.