2020 was supposedly the ‘Year of the electric vehicle’ but the COVID-19 pandemic is rapidly depleting the charge from the auto industry.
From flights to cruises to subway trains, everything has ground to a halt and people are asked to work from home. And like almost every other industry, the automobile sector, and especially the EV industry, will have to cop one on the jaw because of the coronavirus. Global EV sales were expected to experience a record year in 2020 and the total number of EVs on the road was to surpass 10 million. However, that is a pipe dream at this point as the pandemic threatens to keep the global economy in hibernation for several more weeks.
Being the biggest EV market in the world, China also was the first to feel the effect of the virus with EV sales falling more than 52 per cent in January 2019 when compared to January 2018 and February saw a drop of 77 per cent. According to the China Association of Automobile Manufacturers data, over 80 per cent of production was down. Analysts opine that since EVs are a premium segment and the supply chain in its budding stage, they are exposed at large. China has reported fewer cases of the COVID-19 and the manufacturing industry is working hard to revive the economy, with factories coming on stream in the last few days as the lockdown is lifted.
But Europe and North America will face the effect of the pandemic some more time. Companies like Ford, General Motors, Fiat Chrysler, Honda and Tesla have shut down their factories in North America till the end of March as the thousands more are diagnosed with the virus that causes flu-like symptoms and has proved deadlier to the elderly.
Coronavirus impact on Indian auto industry
As far as India is concerned, reports suggest that the auto industry is expected to bear a loss of around Rs 13,000 to Rs 15,000 crore because of the virus outbreak with several brands shutting down production temporarily. With the Government of India announcing a lockdown for 21 days from today, this is set to increase by several billion dollars.
Brands like Fiat, Mercedes-Benz and Mahinda were the first to shut down their plants in view of the virus breakout and were followed by more companies including Maruti Suzuki, Hero MotoCorp, Tata Motors, Bajaj Auto, Yamaha, Ashok Leyland, Honda Car India, Renault, Kia and more. Now that the Indian government has announced a 21-day lockdown across the country, the industry too has come to a complete stop. Not only OEMs, but the MSME industry too will take a hit. Though there are no numbers yet, thousands of MSMEs involved in manufacturing auto components will also be affected.
Withe BS4 to BS6 transition happening, and the sales are not happening now, the Federation of Automobile Dealers Association (FADA) has approached the Supreme Court for a solution for the pending BS4 stock, which they will not be able to sell from April 1, 2020.