KV Kamath bats for EVs stating writing them off too early would be unfair

As Indian EV pioneers like Ola Electric and Ather Energy make a beeline for the public market, and fledgling EV industry start-ups face uncertainty about continued government support through EV subsidies, the legendary former chairman of ICICI Bank, known for his vision of the future, has come out in support of the Indian EV sector.

Speaking to Autocar Professional on the sidelines of the 21st Annual Capital Market Conference organised by FICCI, KV Kamath said it would be a mistake to write off EVs simply because they require more upfront investment than traditional vehicles.

He used the example of solar energy, which -- he pointed out -- was nowhere as cost-competitive as traditional sources of power when it started in India in the early 2010s.

“Ten years ago, solar was not a viable power generation model. And today that's the cheapest source," Kamath emphasised, stating that we are seeing a similar story emerge in the EV ecosystem with battery costs dropping and the whole process becomes much more efficient.

However, many EV start-up players – dependent on government subsidies – are acing a rough ride, with the government having made up its mind to reduce support for electric two-wheelers and passenger cars and move towards mass rapid transportation.

"This is what I call a sort of trap that happens for early start companies," Kamath indicated. He pointed out that not all EV start-ups can survive and thrive, stating that "players who enter a new sector too early find it difficult to survive as the cost of components are too high due to lack of scale."

He illustrated this with the help of the early entrants into the solar sector, who "came in when the costs were not competitive and the industry was not fully viable. [In contrast] the new entrants now don't face this issue. As in the case of solar power, this will also get replicated soon with electric vehicles," he indicated. 

Meanwhile, early start-ups are facing a double jeopardy situation, with venture capitalists being extremely cautious with their lending and businesses not reaching the scale to tap into the capital markets.

Ola Electric’s Rs 6,146-crore IPO, the largest one the market has seen this year,  was forced to pare down its valuations by 25 percent from $5.4 billion, at which it raised funds in September last year, to $4 billion, in the fresh issue of shares for the public

Various Broking houses have given a subscribe rating to the IPO with caution, stating investors should be willing to invest and should be prepared for a higher risk appetite.

The National Stock Exchange (NSE) has unveiled India's first Nifty EV & New Age Automotive Index, marking a significant step in the fast-paced growth of the country's stock market and tracking the performance of companies involved in the electric vehicle (EV) and new-age automotive sectors, including hybrid and hydrogen fuel-based vehicles.