Bharat Forge prepared for shift to electric mobility

Bharat Forge prepared for shift to electric mobility

EV 101

A lot of disruption is happening in the automotive industry. With stricter regulations on emissions around the world, auto manufacturers are shifting to electric alternatives.

“2021 will be the year electric vehicles (EVs) will take centrestage,” Bharat Forge, country’s leading exporter and manufacturer of auto components, said in its annual report.

The EV market is expected to be valued at over $1.2 trillion by 2027, according to Million Insights, a California-headquartered market research firm. “The growth can be imputed to the number of government initiatives across the globe to promote the adoption and manufacturing of EVs”, Million Insights said in May 2020.

“The global electric vehicle stock (excluding two/three-wheelers) will reach nearly 145 million vehicles and will account for 7 percent of the global vehicle fleet by 2030,” according to International Energy Agency (IEA) in its annual global EV outlook report, released in April 2021.

A lot of countries around the world, particularly in Europe, are giving incentives to automakers to produce EVs. This, in addition to the competition to grab the new market, is expected to push the EV sales in the coming years. “18 of the 20 largest OEMs have committed to increase the offer and sales of EVs,” IEA had added in its April report.

In its annual report, Bharat Forge quoted an independent study by CEEW Centre for Energy Finance (CEEW-CEF), which is an initiative of the Council on Energy, Environment and Water (CEEW), one of Asia’s leading think-tanks.

The study suggests that the Indian EV market is predicted to be a $206 billion opportunity by 2030. The projection includes sales of battery EVs (BEVs), plug-in hybrid EVs (PHEVs), retrofitting of old internal combustion engine (ICE) vehicles as well as the charging infrastructure.

Separately, Bharat Forge mentioned that the India Energy Storage Alliance (IESA) expects EV sales to grow at compound annual growth rate (CAGR) of 44 percent between 2020 and 2027, to hit 6.34 million units, primarily led by two-wheelers and three-wheelers.

For Bharat Forge, which manufactures critical components for the automotive industry, the thrust on electric mobility has been on since 2016, when it formed a separate vertical and established a formal e-mobility strategy.

"A part of our business is exposed to this shift and may come under stress in the medium term," said Baba N Kalyani, Chairman and Managing Director of Bharat Forge, in the latest annual report. The company predicts a hit of 10 to 12 percent to its business in the medium- to long-term if there is a total shift from the internal combustion engine. "The e-mobility business and other verticals we are focusing on will more than make up for this loss of revenues," Kalyani added.

The larger automotive industry which had been on a downtrend, saw the COVID-19 pandemic causing large-scale disruptions in its business. At Bharat Forge, it resulted in a 20 percent fall in its standalone revenue to Rs. 3,651.5 crore in 2020-21.

However, Bharat Forge is now gearing up for the era of electric vehicles. "We are focused on becoming a future-ready enterprise that is more digital, more competitive and more evolved,” said Kalyani.

The company has been working on e-mobility and light-weight auto components for the past few years. It expects the demand for it to shoot up, as worldwide EV production picks up in coming years.

Auto companies are using more aluminium and other light-weight materials as they shift to EVs. And, Bharat Forges has set up a Centre for Light-weighting Technologies (CLWT) facility in Nellore, Andhra Pradesh to manufacture lighter aluminium or magnesium composites from traditional heavier steel subsystems.

Besides investing in EV startups in India and Europe, the company created a separate subsidiary for its e-mobility business, Kalyani Powertrain. The plan is to achieve 5-6 percent market share in the segment, by 2025, by manufacturing electric vehicles in the two and three wheelers and commercial vehicles segment.

Another challenge is to create a talent pool with completely new skill sets and intensifying research and innovation, said Kalyani.

Bharat Forge is training its employees to be competent in skills needed to develop new technologies through internal training programmes and external collaborations with institutes to facilitate skill development, management development, and technology development.

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