AgenciesSona BLW Precision Forgings, which has been supplying components for electric vehicles to automakers in North America, Europe and China, said the global EV market is estimated to grow at a compound annual growth rate of 36% for the next four-five years

Demand for commercial vehicles has started picking up in the local market and will emerge as an additional lever of growth, along with international markets and the battery electric vehicle segment mid-term, said auto component firm Sona BLW Precision Forgings.

The company, however, said that while green shoots are visible in the CV segment, it expects sales in the category to regain peak volumes seen in 2018 only by 2024. In 2020, 505,189 commercial vehicles were sold in the domestic market, just over half of the 1,005,380 units sold in 2018.

Contribution from electric vehicles to the company’s overall revenues will increase every year, said managing director Vivek Vikram Singh.

The share of battery electric vehicles (BEV) in the first quarter of this financial year grew to 19.9% from 13.8% in 2020-21.

Sona BLW Precision Forgings, which has been supplying components for electric vehicles to automakers in North America, Europe and China, said the global EV market is estimated to grow at a compound annual growth rate of 36% for the next four-five years. With 57% of its new order book of $ 1.9 billion over the next 10 years coming in from the BEV or PHEV (plug-in hybrid) segment, the company said its revenue dependence on components for internal combustion engine vehicles will steadily reduce.

Overall, the company is looking at investing about Rs 950 crore in the three years till 2023-24 to service its order book.

Singh said while the company is executing programmes in the EV segment for customers in India, the market is evolving and yet to gain sizeable scale, both in volume and value terms. “The potential is huge, policies are in favour (of EVs). Once the cost of batteries comes down, the market will tip,” he said.

The company, which supplies gears, differential assemblies and final assemblies to carmakers making EVs of 100 kilowatts and above, is working on expanding the driveline product range to cover the small and mid-segment BEV market. In the motor business, the company has developed higher voltage systems like the 48 watt BSE or the 30 kilowatt plug-in hybrid motor and controller, which are both currently in testing phase with different customers in India and China

Separately, to reduce dependence on China for raw materials in the changed geopolitical environment, the company is working with Israel’s IRP Nexus and India’s iCreate to develop a new powertrain, which will not use magnets. Sona Comstar will have the exclusive rights to manufacture the systems in India for sale in the global two- and three-wheeler market.

China controls 95% of the global supply of magnets. “A big portion of the cost of the motor is rare earth magnets. If we can make a motor without magnets, not only can we ensure security of our supplies, there will also be a huge cost advantage,” said Singh.

If successful, a cheaper light-weight motor can accelerate e-mobility, particularly in the two-wheeler segment, he said.

To persify risks geographically, the company has additionally been making efforts to expand business in Europe and China. Most of its new EV orders in the past nine months have come from Europe. International business accounted for 79% of revenues in the quarter to June, led by North America, Europe and China.