Booking the latest models of electric vehicles is on almost everyone’s checklist. Unlike in earlier times, everyone in India is looking forward to buying an electric vehicle. However, the rising prices of electric vehicles are making people wait until the prices hit a lower circuit.
So, what are the reasons behind the sudden jump in the prices of electric vehicles?
The global market of batteries was disrupted after the war broke out between Russia and Ukraine. The reason is very clear, Russia is the market leader in bars of nickel (the significant element for manufacturing batteries). Russia fulfills approximately 20% of nickel demand in the world.
And Therefore, this increase in geopolitical tensions will create an adverse gap in the demand and supply chain.
As a result, the customers will bear the increase in the price of the upstream raw materials once companies like Hero Electric, Kinetic Green, Ather Energy, etc come up with the increased price chart. But are manufacturers to be blamed?
No, the manufacturers are not at fault. They are forced with extreme margin pressures leaving them helpless and no alternatives but to increase the price of vehicles.
| Can EV manufacturers absorb the price increase?
India lacks the demand for electric vehicles resulting in a weak manufacturing eco-system for EVs. Therefore, India imports batteries, which constitute approximately 50% of EV’s price, from different countries like China, Japan, South Korea, etc.
The Russian-Ukraine War had a major impact on the supply of upstream raw materials manufacturers use in Electric Vehicles.
Therefore, it is difficult to mitigate the 15-20% hike in the price of raw materials. A hike in the price is not a new issue with electric vehicle manufacturers.
In the year 2021, manufacturers absorbed approximately a 4-6% increase in raw materials when the global pandemic hit the supply chain across the world. However, the present conditions soared because of the fear of a decline in Russian supplies.
If India wants to lead the EV industry or become self-sufficient, the local manufacturers need to adopt green transition for Cobalt, Platinium, Nickel, Copper, and even Palladium. The geopolitical tensions will soon or later disrupt the supply chain putting the manufacturers at risk.
Adopting the green transition will help India to overcome any uncertain events and dependency on other countries.
While some are advising manufacturers, suppliers, and customers to wait and watch and take a call, it is always better to work on what you have. Manufacturers will end up increasing the price of vehicles if the situation in Russia doesn’t come back to the normal stage. Suppliers will need to wait for further improvements.
However, customers will have a difficult call to take. They can either wait for an ideal time when the prices move back to hit a stage where common people can afford it or they have to step into this rush.
Therefore, under any circumstances, the long-term vision always holds the upper hand, ‘strengthening the EV eco-system of India’.