Forging industry to take a 20% to 25% hit as EV’s pick up speed
The 60,000-75,000 crore forging industry in India could see 20%-25% of its market wiped off in the next eight to 10 years once the electric penetration picks up speed in two and three wheelers. According to sources in the auto industry, the number of parts in a vehicle come down from more than 2000 in a petrol or diesel engine model to around 30 in an electric version.
“Currently 25%-30% of the forging industry is supplying small parts to the auto industry and many of these suppliers will go out of business,” said Vidyashankar Krishnan, MD, MM Forgings. Typically lighter parts and engine parts suppliers will be affected because these are forged parts, he added.
Chassis and steering parts suppliers will survive, though the competition in these segments will be intense, he added. India’s forging industry is three million tonne strong with a very deep MSME footprint.
The pinch is not due immediately because EV penetration in two and three-wheelers will take time to hit critical mass. “It will take another five to eight years at least for two-wheelers to hit close to 100% electrification followed by three-wheelers, public transport and finally four wheelers,” said Krishnan.
Currently parts that need higher strength-weight ratio are forged. Once EV penetration hits top gear, there will “definitely be an impact on the forging industry particularly those supplying to two and three wheeler OEMs,” he added. This segment will need to change tack or face a sharp hit.
The good news is the industry has some time to ready itself and is already looking at alternative markets. Vikas Bajaj, president of the Association for Indian Forging Industry (AIFI), the industry’s apex body, said, “The impact could start showing up in five to six years but even then there will be growth as hybrids use forged parts and ICE and EV models will both see increase in sales. “Things will get clearer in the next three to four years,” he added.
Parallelly forging associations are looking at alternatives like defence based requirements with aluminium forgings where light weighting is needed. “The potential is there and forging can play a role in the transmission of electricity as well where casting now rules,” said Bajaj. AIFI is telling members about the options available, he added.