CBRE South Asia Pvt. Ltd., India's leading real estate consulting firm, today announced the findings of its report, 'Electric Vehicles in India - New Wheels on the Roads'. The report focuses on the real estate strategies for various stakeholders in the electric vehicle manufacturing lifecycle.
According to the report, real estate requirements for manufacturing EV batteries are estimated to reach around 2,400 acres by 2030 as a result of the government's EV adoption targets. Uttar Pradesh and Maharashtra, lead the charging infrastructure manufacturing.
The report further points out that the current primary clusters for Lithium-ion Battery (LiB) manufacturing exist in Chennai, Hyderabad, Pune, Prantij, Surat, Mandal, Delhi-NCR, Gurgaon, and Mohali. Additionally, Maharashtra has the highest count of sanctioned EV chargers, with 317 under Phase-II of the FAME India scheme, followed by Gujarat with 278 EV chargers. Currently, India manufactures Lithium-ion cells by importing raw materials, which account for 77 per cent of the total manufacturing cost. However, this is set to change with the discovery of a 5.9 million tonne lithium reserve in Jammu and Kashmir's Reasi District in February this year. This is expected to reduce India's reliance on imported lithium significantly.
The real estate requirements of manufacturing facilities of 4-Wheeler and 2-Wheeler Electric Vehicles (EV) is estimated to be around 13 million sq. ft. by 2030 as a result of the government's EV adoption targets. It is also expected that by 2030, the real estate requirement will allow a production capacity of approximately 4 million units of 4Ws and 23 million units of 2Ws. Built-to-suit (BTS) and leased facilities are primarily preferred by EV manufacturers in India due to ease of capital deployment, flexibility in lease terms, speed to market and location advantages. However, an owned facility provides more scope for customisation, saves monthly rental outgoings and has better prospects for land price appreciation.
Several policy enablers by state and union governments have enabled the creation of an indigenous EV manufacturing eco system by incentivising fresh investments from global and domestic players. During the 2020-2023 period (YTD), Maharashtra and Tamil Nadu led EV investments with a 15 per cent share each of the cumulative USD 28.8 billion investment. Meanwhile, Karnataka accounted for an 11 per cent share, Gujarat 8 per cent, and Uttar Pradesh and Telangana recorded a 7 per cent share each.
Key investment announcements in the EV sector during Q1 2023 are mentioned below:
- Maharashtra - Gogoro Belrise Industries announced an investment of about USD 2.5 bn for charging infrastructure manufacturing facility
- Tamil Nadu - Ola Electric announced an investment of about USD 0.9 bn for a battery manufacturing facility
- Uttar Pradesh - Tauschen E-mobility announced an investment of about USD 0.2 bn for an EV manufacturing facility
For the current year, the EV sector has recorded investment announcements of about USD 6.2 billion to date. The year 2022 witnessed strong traction, with global and domestic players announcing investments of over USD 17.1 billion in the EV industry, a y-o-y increase of about 287 per cent compared to USD 4.4 billion in 2021. In the same period, more than half of the investments were driven by EV component manufacturers.
EV investment trends (2020 - H1 2023)
EV manufacturers and multiple e-mobility start-ups are concentrating their presence in the primary automotive clusters in India. Uttar Pradesh took the lead in registered EV annual sales in 2022 with a 16 per cent share, closely followed by Maharashtra with a 13 per cent share and Karnataka with a 9 per cent share. These three states together dominated India's EV sales in 2022, accounting for approximately 40 per cent of the overall sales volume.
The Indian EV market is expected to grow at a Compounded Annual Growth Rate (CAGR) of about 49 per cent between 2021 - 2030 and cross annual sales of 17 million units by 2030.
Anshuman Magazine, Chairman and CEO, India, South-East Asia, Middle East and Africa, CBRE, said, "As we look ahead, the intersection of real estate and the EV sector presents exciting opportunities and challenges. By 2030, we anticipate a surge in demand for real estate, with a requirement of ~13 million. sq. ft. dedicated to EV manufacturing facilities alone. The cumulative investment value in EVs over the last three years demonstrates the immense financial commitment and confidence placed in this sector."
Ram Chandnani, Managing Director, Advisory and Transactions Services, CBRE India, said, "The future of the EV industry is bright, and real estate will play a pivotal role in shaping its trajectory. As demand for EV manufacturing facilities, charging infrastructure, and associated services expands, the real estate sector will need to adapt and provide the necessary infrastructure and spaces to accommodate this growth. By leveraging our expertise and resources, we aim to facilitate the seamless integration of the EV ecosystem into the broader real estate landscape, fostering sustainable growth and innovation."
Real Estate Strategies (Investors, Manufacturers, Developers/Landlords)
Industrial Parks and Stand-alone Manufacturing Facilities:
- Focus on speed-to-market to meet the rising demand
- Focus on multi-sourcing and near-shoring / friend shoring strategies to improve supply chain efficiencies.
- Partner with 3PL players to improve supply chain networks
- Set up facilities near consumption hubs / transportation nodes
- Target suitable facilities or partner with landlords to enhance assets
- Leverage government incentives to strengthen EV manufacturing capabilities
- Install new-age technologies to improve operational efficiencies
Warehouses
- Set up EV warehouses closer to auto clusters / manufacturing hubs
- Set up high-specification Grade A warehouses to store Lithium-ion batteries which would require controlled environments
- Upgrade modern warehouses to enhance storage efficiencies
- Enhance last-mile efficiencies by establishing distribution centres near the consumption hubs; partner with 3PL players
Use technologies such as warehouse managing system, thermal monitoring system for batteries, Automated Guided Vehicles (AGVs) to improve operational efficiencies in warehouses
