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Manufacturing of Electric Vehicles (Two Wheelers/Three Wheelers/Passenger Cars) Automobile and Auto components Government of Gujarat

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Manufacturing of

Electric Vehicles(Two Wheelers/Three

Wheelers/Passenger Cars)

Automobile and

Auto componentsGovernment of Gujarat

Page 2

Contents

Project Concept 3

Market Potential 4

Growth Drivers 7

Gujarat – Competitive Advantage 8

Project Information 10

- Location/ Size

- Infrastructure Availability/ Connectivity

- Raw Material/ Manpower

- Key Players/ Machinery Suppliers

- Potential collaboration opportunities

Project Financials 14

Approvals & Incentives 16

Page 3

Project Concept

Indian Auto Industry Overview

Indian Auto and Auto Components Industry Classification

Automobile

Passenger cars Two-wheeler Three-wheelerCommercial

vehicles (CV)

Cars

Utility vehicles

Multi Purpose

vehicles

Motorcycles

Scooters

Mopeds

Commercial

purpose

Passenger

carrier

Light CVs

Medium and

heavy CVs

Mining

equipment

and

earth moversAuto components

Engine and

engine parts

Powertrain

parts

Suspension

and

braking

parts

Lighting and

other

equipment

Accessories Others

Auto and auto components industry in India is growing and maturing at a fast pace in terms of

size, model variants and technological advancements in new cars. Some of the factors attributable

to this growth include a buoyant end-user market, improved consumer sentiment and return of

adequate liquidity in the financial system.

The Indian auto-components industry can be classified into - organised and unorganised sectors.

The organised sector caters to the Original Equipment Manufacturers (OEMs) and consists of

high-value precision instruments, while the unorganised sector comprises low-valued products and

caters mostly to the aftermarket category.

Sources:http://www.ibef.org/industry/autocomponents-india.aspx

The proposed unit involves manufacturing of electric vehicles (AC-induction motor based) in Sanand, Gujarat. The estimated project cost of the proposed unit is INR 1 billion including land, plant and machinery cost. The demand for such a facility is justified taking into consideration that, Less than 500,000 electric vehicles (EVs) presently exist in India.

More than 95% of electric vehicles are low speed electric scooters that do not require insurance, license or road tax. India is set to become the 3rd largest automotive market by 2020 and currently has one of the lowest vehicle penetration in the world making it a viable market for EVMs.

Project Overview

Page 4

Market Potential

Electric vehicles (EV) industry is at a nascent stage in India, comprising less

than 1% of the total vehicle sales, however it has the potential to grow

significantly in the coming years. Electric vehicle sales are expected to grow

at high double digit growth rates annually till 2020

0%

11%

89%

PHEVsBEVsHEVs

EV sales split by

type (2014)

2014

0.3%

2020

1.5%

Share of electric vehicles in total light duty vehicle sales

EV sales split by

type (2020)

11%15%

74%

PHEVsBEVsHEVs

EV sales split by type (2014)

723

3,056

3,845

5,519

6,7787,379

8,601

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2014201520162017201820192020

un

its

Battery Electric Vehicles

6,088 6,986

10,033

18,154

27,543

35,994

42,482

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2014 2015 2016 2017 2018 2019 2020

Hybrid EV

Page 5

Market Potential

4 wheelers 2 wheelers

Currently, only Mahindra and Mahindra (M&M) and Toyota offer electric/hybrid

4-wheelers in the country, with several players having plans of launching new

products

Mahindra

Reva

Toyota

Tata Motors,

GM, Maruti

Suzuki,

Volkswagen,

Ford, BMW

Ampere

Electrot

herm

Hero

Electric

Lohia

Auto

► History: Founded in 1994 as the

Reva Electric Car Company in

which Mahindra Group acquired

majority stake in 2010

► Low sales: Currently sells the

e2o electric car (launched in

2013) that has sales of less than

500 units per year

► Two hybrid models on sale:

Currently offering completely

imported Toyota Prius and Camry

Hybrid

► Low sales: The company has

sold 170 odd units of Toyota Prius

since its launch in January 2010

► The companies either announced

plans to launch India specific EVs

or showcased these vehicles at

Auto Expositions but have not

commenced production yet

► <5,000 units

in FY13

► Capacity of

10,000 units

per months

► 8,000 units

sold in FY13

► Annual

Capacity of

60,000 units

► 150

dealerships

► 14,000 units

sold in FY13

► 80% low

speed models

► 204

dealerships

► 4,000 units

sold in FY13

Page 6

Market Potential

► Less than 500,000 electric vehicles (EVs) presently exist in India.

► More than 95% of electric vehicles are low speed electric scooters that do not require insurance, license or road tax.

► All electric two wheelers currently operate using lead-acid batteries

► The government is in the process of regulating e-rickshaws that has resulted in interest from many EV manufacturers to launch electric three-wheelers

Indian EV market dominated by two wheelers; regulation on e-rickshaws to boost sales

Currently only one model of Battery electric 4 wheeler on sale in India

► Mahindra Reva is the only company that currently offers Electric vehicle and its current model e2o uses Li-ion batteries

► Demand for Reva in India has largely been stagnant — with less than 500 cars sold in a year.

► Demand for hybrids is also low primarily due to lack of available models (currently only Toyota sells hybrid models, Prius and Camry)

Sales of electric vehicles largely dependent upon government incentives

► Government incentives widely influence the electric vehicle sales

► As a result of government’s incentive in FY11, electric vehicle sales (including two wheelers) registered a growth of 30% on a y-o-y basis.

► A withdrawal of the subsidy scheme led to a 50% drop in electric vehicles sales

Key characteristics of the Indian Electric vehicles’ industry

Page 7

Growth Drivers

Exchange rate used: USD/INR: 64.0240 (2015 calendar year average)

Demographic

potential

Rising energy

demand

Congestion and

driving patterns

Government

focus on

promoting EVs

► India projected to add 352 million people by 2035

► India has the lowest median age of 28 and rising individual wealth

Large domestic

market for

automobiles

Low

manufacturing

and operational

costs

► Energy demand expected to rise 70% in the next decade

► The percentage of imported oil to reach 92% by 2020

► A need to lower CO2 emissions to drive demand

► Lower labor costs and large pool of engineers to favor EV manufacturing

► Electric vehicles also have lower lifecycle costs

► India to become the 3rd largest automotive market by 2020

► It currently has one of the lowest vehicle penetration in the world

► Indian drivers have to drive at low speeds, make frequent stops and have short commutes

► Indian EVs can be designed for shorter range and lower speeds

► National Electric Mobility Mission Plan 2020 provides the roadmap for achieving significant penetration of electric vehicles in India by 2020

Page 8

Gujarat - Competitive Advantage

Sources:

“Manufacturing Sector – Profile”, Vibrant Gujarat website, 7 October 2014

“Gujarat – Growth and Prosperity for All”, Vibrant Gujarat website, 25 August 2014

Large auto clusters being developed

near Rajkot and Ahmedabad

500+ auto component

manufacturers in the Rajkot district

4–6 emergingAuto clusters will be

developed near Ahmedabad

Particular Symbol

Existing Auto Clusters

Emerging Auto Clusters

in SIRs by 2015

Emerging Auto Clusters

in SIRs by 2020

2–3 emergingAuto clusters will be

developed near Rajkot

Auto Cluster in the State

Special Investment Region (SIR)

► Gujarat is emerging as a key investment destination for the major auto players. The state is set

to become the country's automotive hub within the next few years.

► Gujarat government plans to increase the share of automotive industries in its overall

engineering output to 10% by 2020, from the current 3.7%.

► Gujarat expects to surpass the production capacity of top car manufacturing states like

Haryana, Maharashtra and Tamil Nadu, with an installed capacity to roll out 1 million units

annually within the next 3-4 years.

► Incremental manpower requirement in Gujarat for the manufacturing of engineering goods is

expected to be 53,580 during 2017-22.

Page 9

Gujarat - Competitive Advantage Skill development and training in auto sector is a focus area for

Gujarat government

Gujarat is a hub of

engineering industry, with

the manufacturing and

engineering sector in

Gujarat contributing over

27% to the state’s GSDP

and contributing 9%

overall to the national

engineering output.

The government has already

established

multiple CoEs (including one

on Industrial automation

in Mehsana itself) and is in

process of establishing more

across the state.

The Gujarat government

has recently passed the

Labour Laws Bill

(December 2015), to give

an impetus to

industrialization in the

State.

Gujarat has a strong

educational infrastructure in

automobile sector with 27

colleges providing technical

education in the sector with

annual intake capacity of

1,980, and additionally 111

colleges provide technical

education in mechanical field.

In addition to the

national level incentives,

the Gujarat government

is providing financial

incentive for setting up of

CoEs for the

manufacturing sector.

Gujarat is relatively less

congested and polluted

offering better standards of

living to the inhabitants.

Manufacturing

and engineering

sector growth

Government

focus to

develop CoEs

Favorable labor

policy

Well-developed

skill

development

industry

Financial

incentives

Better social

infrastructure

Sources:

http://www.narendramodi.in/maruti-to-invest-rs-4000-crore-at-bechraji-agreement-signed-with-gujarat-govt-4536

http://www.thehindu.com/news/national/gujarats-controversial-labour-laws-bill-gets-presidential-assent/article7938265.ece

http://www.vibrantgujarat.com/writereaddata/images/pdf/Skill-Ecosystem-Updated.pdf

http://www.business-standard.com/article/economy-policy/gujarat-govt-plans-incentive-scheme-to-boost-manufacturing-sector-

113022500549_1.htmls

Page 10

Project Information

► Sanand, Gujarat is an indicative location for establishment of Electric Vehicle

Manufacturing plant. Alternatively, the plant can be set up in any other suitable location in

Gujarat.

► 66 KV Vendor Park and 66 KV Chharodi substations are located approx. 4 km away from

the boundary of the estate

► A 400/220/66KV substation is planned within the Sanand Estate to be operational in 2-3

years

► For solid waste – two disposal facilities are available, Naroda & Vatva. The company has to

transport their solid waste to these sites themselves. The sites are around 50 km form

Sanand

► Gujarat State Petronet Ltd. would supply gas in the estate till the door step

► Port Connectivity is available with three ports – Kandla, Mundra & Pipavav

► Sanand has the advantage of a Broad Gauge (BG) railway network and NH–8A which

connects Ahmedabad to Saurashtra and Kutch passes through Sanand

► Ahmedabad International Airport is the nearest airport located at a distance of 30 kms from

Sanand

Project site – Sanand (Gujarat)

13.5 KL water/ha area

12+ auto ancillary units to

be setup

300 vendors expected to

setup

Project at a Glance

Project Name Automobile manufacturing (OEM)

Location Sanand, Gujarat

Area 2000 ha

Focus Sector

Engineering, Automobiles and ancillary

units, Engineering plastics,

Semiconductors, Electronics

Target Audience Tata, Ford, Bosch, Valeo, JBM, Visteon, Magna,

Page 11

Project Information

► National Highways: NH–8A, which connects Ahmedabad to Saurashtra and Kutch,

passes through Sanand.

► State Highways: SH–17 connects Ahmedabad to Sanand and joins NH – 8A leading

to Kutch. SH-144, SH-135 and SH – 74 are the other important linkages within

Sanand.

► Ahmedabad International Airport is the nearest airport located at a distance of 30

kms from Sanand .

► There are domestic airports located in Baroda and Surat.

► Sanand has the advantage of a Broad Gauge railway network

► The nearest railway station is at Ahmedabad at a distance of 40 km from the

Sanand.

► Port Connectivity is available with three ports – Kandla, Mundra & Pipavav.

► Mundra port is linked by NH – 8A and lies at a distance of about 400 kms from

Sanand.

Sanand is well-connected with other districts in Gujarat as well as

other cities in India

► Gujarat has a state-wide “water supply grid” spread across 1,20,769 km that aims to

serve 75% of Gujarat’s population.

► Gujarat Industrial Development Corporation (GIDC) is responsible for ensuring

consistent water supply in industrial areas

► Two disposal facilities are available, Naroda & Vatva, are available for solid waste.

The sites are around 50 km form Sanand

The State Government ensures robust physical/industrial

infrastructure & utility linkages

► Gujarat boasts of 24 hour – 3 - phase uninterrupted power supply

Sources:

http://www.mapsofindia.com/maps/gujarat/districts/mehsana.htm

http://www.nsdcindia.org/sites/default/files/files/gujarat-sg-report.pdf

Page 12

Project Information

Category Machinery / Equipment suppliers

Engine and Gear Boxes Bharath Forge Amalgamation Group Rane Group

Axels JBM Axles India Amtek

Door panels Dow AutomotiveTata autocomp

systems limitedJBM

Exhaust systems Faurecia Autoflex Emcon technologies

Heating, Ventilating, Air-

conditioning and CoolingDenso Sanden Subros

Seats Lear Johnson controls Netplast

BatteryTata autocomp

batteryMinda battery N/A

Tires Apollo Bridgestone MRF

Horn Hella Denso Minda

Dashboard IAC

Tata autocomp

systems limited -

interiors and plastics

division

Hyundai Mobis

Wiring Harness Delphi MothersonSumiTata yazaki

autocomp

Page 13

Key Considerations

Lack of

consumer

awareness

and price

sensitivity

According to

government

surveys, most

consumers are

unaware of

electric

vehicles

Most

consumers

have concerns

over range,

poor battery life

and high initial

price

Practically

non-existent

infrastructure

No formal charging

infrastructure exists

except for about 250

charging stations built

by Mahindra Reva

Most vehicles use

standard 15-amp

sockets to recharge

High reliance

on imported

components

from China

Due to low domestic expertise, a large number of

components for EV especially batteries are

imported from China, which are often of low

quality

Erratic

government

support

Unreliable

electrical

supply

Government’

s subsidy

program in

2010 was

poorly funded

and was

aborted soon

later

Government’

s current plan

has also

witnessed

long delays

Power outages and

blackouts are

common in India

Currently India has

an average power

deficit of 8%-10%

and is highly

dependent upon coal

Key Issues in the Indian Electric Vehicle market

Key considerations

► Low energy costs in order to remain competitive

► Uninterrupted Power supply

► Reduction in Startup and Operating Wastages

► Technology transfers are one of the key factors

that have driven the government’s promotion of

FDI

► A higher degree of technical skill for

assembling and testing

► Decline in the lithium ion battery price

► Expected rising demand due to stringent

emission standards

► Strong government focus and support

Page 14

Project Financials

Target 6-7 million electric

vehicles on road

by 2020

Save 2.2-2.5

million tonnes of

fuel

Pri

mary

in

vestm

en

t are

as o

utl

ined

in

NE

MM

P 2

020

INR140 billion

Investment from the government,

while balance to come from the

industry

~INR224

billion

Total

investment

required in the

Indian EV

market

Demand incentives~INR122-138

billion

Research and

development

Infrastructure

related

investments

~INR15-18

billion

► Government expected to

provide incentives to cover

35% of the cost differential

between electric vehicles

and conventional vehicles

Pilot projects

Supply incentivesLocalization

conditions

► Investment in the form of

setting up of testing and

R&D infrastructure

► Most investments expected

from industry

► Government investment for

pilot projects for charging

infrastructure

► The creation of local

manufacturing eco-system

boosted through firm

localization commitments

that will be pre-conditions

for demand incentives

Page 15

Project Financials

S. No Cost parameters Cost (INR billion)

1 Land in Acre 0.367

2Average land price in Sanand** per sq feet as per JLL

(INR hundred)375

3 Total land cost (INR billion) (Area X average land price) 0.6

4 Total investment including land (INR billion) 1

5Investments on plant, machinery, building, civil work etc

(Total investment – land cost) (INR billion)0.40

6 Shift operation Single Shift operation

7 Capacity (units/annum) 30,000

Estimated Project Cost

► Project cost: The estimated project cost is INR 1 Billion

► The proposed unit will be manufacturing AC-induction motor based electric vehicle where the

major components of the motor include. The case study of the Mahindra Reva Electric Vehicles plant in Bangalore, Karnataka has been considered to arrive at a ball park figure of the total project cost of the proposed unit.

** Assuming the land is purchased, not rented (in Sanand)

► Typical Electric Vehicles use many of the same type of systems and components as a CV,

especially in the body and chassis. However, the powertrain of an EV is completely different, and

its energy storage (replacing fuel tank) becomes a major sub-system.

► Absence of a continuously running engine affects such accessory systems as heating,

ventilation, and air-conditioning (HVAC), steering, and brakes and consequently requires

independent (electric motor) drives for them.

Sources: http://www.business-standard.com/article/companies/mahindra-reva-opens-new-car-making-unit-112082300035_1.html

Page 16

Approvals & Incentives

Aiming to reduce pollution, the Government announced a series of cesses under

the Union Budget 2016–17 to discourage the purchase of conventional fuel

vehicles and to promote hybrids/EVs

Potential impact on the industry

Infrastructure cess

exemption to

hybrid/EVs

The government proposed an

infrastructure cess,

• 1% on small petrol, LPG, CNG

cars

• 2.5% on diesel cars of certain

capacity vehicles

• 4% on other higher engine

capacity vehicles and SUVs

The hybrid/EV market is at a

nascent stage in India,

however, through government

support and policies it is slowly

creating opportunities

Allocation of funds

under the FAME

The government proposed the

allocation of RS200 crore funds

under the FAME

• The funds would be primarily

used for incentivising the

purchase of hybrids/EVs

• Whereas, 20-25% would be used

for building the technology and

infrastructure

• About 10% would be spent on

pilot project

Extension of fiscal sops

for EV/hybrid

technology

Extended the validity period of

concession on customs and excise

duty on select parts used in the

manufacture of Electric and hybrid

vehicles

The hybrid/EV market has

picked up since last year with

OEMs such as Maruti and

Mahindra focusing on hybrid

marques

It is expected by 2021,

domestic and global OEMs

could launch more than 25 EV

models

Sources:

National incentives

http://www.nsdcindia.org/csec/wp-content/uploads/2016/01/CSEC-Brochure.pdf

State incentives

http://electronicsb2b.efytimes.com/gujarat-governments-five-incentive-schemes-for-manufacturing-sector/

Page 17

Budget

allocation for the

scheme in the

first two fiscal

years

INR7.95

billion

Initial outlay for

the scheme

already

approved in this

year’s budget

INR 0.75

billion

Per unit

incentive for

four wheelers

sold under the

scheme

INR13,0

00 to

138,000

Per unit

incentive for two

wheelers sold

under the

scheme

INR1,80

0 to

29,000FAME* India

Scheme timelines and incentives

►To be

implemented

over a period of

six years, till

2020

►Phase-1 to be

implemented

over FY15-17

►Lower cost of

electric and

hybrid vehicles

for customers,

manufacturers

to claim the

incentive from

government

Scheme launch and

industry reaction

►Scheme effective from 1

April 2015, as a result,

automakers have

reduced prices

►Automakers call the

scheme a welcome

move, but argue that a

lot more needs to be

done. For eg. States

need to reduce multiple

taxes levied on electric

vehicles

Focus areas and

scheme review

►Focus areas:

Technology

development,

demand

creation, pilot

projects and

charging

infrastructure

►Scheme to be

reviewed after

March 31,

2017

* Faster Adoption and Manufacturing of Electric vehicles

Sources:

National incentives

http://www.nsdcindia.org/csec/wp-content/uploads/2016/01/CSEC-Brochure.pdf

State incentives

http://electronicsb2b.efytimes.com/gujarat-governments-five-incentive-schemes-for-manufacturing-sector/

Approvals & Incentives

Page 18

Concession/Exemption of

duties for EV automotive

battery/parts suppliers

Accelerated tax

deduction to promote

R&D in the industry

Specific state

government incentives in

form of tax rebates and

direct subsidies

Government pilot

projects to promote

investment in

infrastructure

Exemption from Basic

Customs Duty (BCD)

for manufacturers of

lithium ion automotive

battery packs

200% weighted tax

deduction for sums

paid to national

laboratory, institute of

technology for

scientific research

A weighted tax

deduction of 200% for

both capital and

revenue expenditure

incurred on scientific

research and

development.

Delhi

► 15% direct subsidy

► 0% VAT (value

added tax)

► 50% rebate in

registration tax

Rajansthan,

Uttarakhand,

Chhatisgarh

► 0% VAT (value

added tax)

Electric

bus pilot

project in

the state of

Gujrat

Concessional excise

duty of 6% extended

to March 2015 for

manufacturers of

batteries supplying to

producers of electric

vehicles

Last mile

connectivit

y to Delhi

Metro rail

passenger

s

Pilot

electric

two-

wheeler

project in

Goa

Sources:

National incentives

http://www.nsdcindia.org/csec/wp-content/uploads/2016/01/CSEC-Brochure.pdf

State incentives

http://electronicsb2b.efytimes.com/gujarat-governments-five-incentive-schemes-for-manufacturing-sector/

Approvals & Incentives

Page 19

Approvals & Incentives

Gujarat Industrial Policy 2015

Government of Gujarat has announced an ambitious Industrial Policy, in January 2015, with the

objective of creating a healthy and conducive climate for conducting business and augmenting the

industrial development of the state.

Category of

Project Location

(Taluka)

% of eligible fixed

capital investment

entitled for

Incentive

% of Net VAT

reimbursement to

the unit

% of Net VAT to be

paid to

Government

Incentive period

(no. of years)

1 100 90 10 10

2 80 80 20 10

3 70 70 30 10

Net VAT incentive will be reimbursed to the industrial undertaking in one financial year will not

exceed one-tenth of the total amount of eligible incentive.

Quantum of incentives

Net VAT incentives

Classification of the Project Amount (in INR billion)

Ultra Mega Industrial Unit 5

Mega lndustrial Unit 4

Large Industrial Unit 1.5

Micro, Small or Medium Industrial Unit 0.5

The incentives under this policy will be available to all the Talukas listed in Government Resolution

dated 25/7/2016 except municipal corporation areas.

Page 20

Approvals and Incentives

Approvals/clearance required Department to be approached and consulted

Incorporation of company Registrar of companies

Registration/Industrial license Secretariat if industrial assistance (SIA) for large and

medium scale industries

Allotment of land State industrial development corporation

No objection certificate (NOC) under

air and water pollution control acts

State pollution control board

Approval of construction and country

planning► Town and country planning

► Municipal and local authorities

► Chief inspector of factories

► Pollution control board

► Electricity board

Use and storage of explosives Chief controller of explosives

Finance For loans higher than INR 1.5 crore, all India financial

institutions like Industrial Development Bank of India(IDBI),

Industrial Credit and Investment Corporation of India(ICICI),

Industrial Finance Corporation of India(IFCI) etc.

Registration under state sales tax act

and Central and State excise act► Sales tax department

► Central and state excise department

Code number for export and import Regional office of director general of foreign trade

Environmental clearance Ministry of environment, forest and climate change after

conducting environment impact assessment (EIA) for any

project

Hazardous waste import and export

approval

Ministry of environment, forest and climate change

Industrial license for defense setting

up defence manufacturing unit

District Industries Centres (DICs), DIC will forward the

proposal to Industries Commissioner who will submit the

report to State Level Approver Committee (SLAC) for final

approval

Exiting business Ministry of corporate affairs

GoG has introduced single window facilitation portal for investors with undermentioned benefits:

► Centralized system to monitor applications

► User friendly and simplified application process for investors

► System for authorities and investors to check the status of applications

► Increased departmental ownership

► The unit shall be facilitated through ‘Investor Facilitation Portal’ for obtaining all the

necessary state approvals/ clearances - https://www.ifpgujarat.gov.in

Indicative List of Approvals

This project profile is based on preliminary study to facilitate prospective entrepreneurs to assess a prima facie scope.

It is, however, advisable to get a detailed feasibility study prepared before taking a final investment decision.

http://www.acma.in/index.php

Automotive Component Manufacturers

www.siamindia.com

Society of Indian Automobile Manufacturers (SIAM)

www.gidc.gov.in

Gujarat Industrial Development Corporation

Industries Commissionerate

Block No. 1, Udyog Bhavan

Sector 11, Gandhinagar – 382 017

Gujarat, INDIA

Ph.: 91-79-23252683, 23252617

Fax : 91(79)232 52683

Email ID: [email protected]

Website : www.ic.gujarat.gov.in