India’s auto sector aims for net-zero emission by 2070, requiring substantial financing, OEM investments, and localization to unlock a USD 19.7 trillion market.
The automobile industry ranks central in India’s quest to attain the goal of becoming a net-zero emission country by 2070. For this kind of transformation to occur, significant automobile financing is important. The Central Government next to financial institutions has to increase support for credit to localize manufacturing, improve R&D efforts, and upgrade the manufacturing web that could underpin the EV-olution.
Market Opportunity and Economic Potential
They pegged this projected opportunity at more than USD 19.7 trillion through the Asia and the Non-Asian Auto sectors by 2070 as indicated in a Climate and Sustainability Initiative Report. It has also been forecasted that the greatest sales increase will occur in the segment of passenger vehicles. The automobile sector credit needs have been pointed out by the report to stand at about 2% currently while it needs to be escalated to as high as 18% by the year 2070. During 2021-2070 the financing is expected to be USD 7.1 trillion for cars, USD 1.9 trillion for trucks and USD 653 billion for 2Ws.
Government Support and Localization
More funding will initiate and enhance localization, R&D, and manufacturing, which are essential links to India’s EV-olution. The Central Government should accordingly promote OEMs and consumers to adopt clean energy technologies. These incentives will encourage localization of auto components and new technologies that can bring down costs which at the moment remain very high, deterring wider adoption of electric vehicles.
Investments and Future Outlook
The initiatives for decarbonization of automobiles will thus entail a lot of capital outlay from OEMs. The CSI report reveals that OEMs have to expend about 323 Billion USD by 2070, but for 2025, the expenditure has to be just 7 Billion USD. Out of these, passenger cars are expected to lead this investment, although the truck segment is expected to contribute over USD 45 billion by 2070 to fulfil domestic needs. Such regions as Tamil Nadu are now the focal points of investments for giants such as Vinfast, Hyundai Motor India, Tata Motors, Ather Energy, Omega Seikki Mobility, and Ola Electric.
The financial initiative, investment, and localisation undertaken jointly by these auto majors and lending institutions will be crucial in moving the auto industry in India on the path towards a sustainable, net-zero emission future by 2070.
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