French auto parts supplier Valeo bets on India’s electric vehicle transition despite cooling demand

“Today, 15% of our business in India comes from electric vehicles, mainly through partnerships with Tata Motors and Mahindra. By 2029, we expect this to increase to 46%. For example, we provide Tata On-board chargers and DC-DC converters, while Mahindra sources electric axles from us,” said Jayakumar G., Group President and Managing Director, Valeo India. Mint. “The next wave of opportunities may come from OEMs (original equipment manufacturers) such as Maruti Suzuki, Hyundai and Kia as they finalize their plans for electric vehicles.”

Valeo India expects the value of electric vehicles to grow 10 to 20 times over conventional internal combustion engine (ICE) vehicles.

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Demand for electric vehicles has fallen in India, hurting companies such as Tata Motors as the government reduces or completely removes incentives offered to consumers. The battery-powered mobility market is still in its infancy, accounting for approximately 2.5% of annual passenger car sales (approximately 4 million units). However, Valeo remains optimistic about the long-term prospects.

“In the past three months, we have seen a slight decline in the penetration of electric vehicles in passenger cars. While this may be a short-term trend, the long-term outlook remains positive,” Jayakumar said. “GST (goods and services tax) and road tax concessions, as well as incentives such as the PLI (production-linked incentive) scheme, are helping to narrow the price gap between electric vehicles and internal combustion engine vehicles.”

He said that globally, markets such as China are leading the way with nearly 50% electric vehicle penetration due to continued government support.

“But in India, ICE vehicles will still grow and EVs will grow with them. For us, the EV business will grow with more content (per vehicle). In five years, there will be a There will be a gradual taper. Growth will probably be slower and then taper off,” Jayakumar said, adding, “At Valeo we also continue to invest in internal combustion engine technology.”

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The company remains invested in its ICE business, which it expects to expand at a compound annual growth rate (CAGR) of 4.4-5% over the next five years.

However, Valeo predicts that the penetration rate of electric vehicles in the Indian passenger car market may reach 29% by 2030. Its forecasts are derived from a study that incorporates the automakers’ strategies and are revised annually based on market changes.

Localization remains at the core of Valeo’s India strategy, especially as PLI plans to drive cost competitiveness. The company plans to invest $Invest Rs 700 crore over the next five years to develop high-voltage electronic capabilities to serve the electric vehicle market.

While the French supplier is betting on localization and cost competitiveness to make electric vehicles more affordable in India, it has called on the government to continue supporting the industry during this period.

“We will encounter some fluctuations (electric vehicle sales) occasionally, but they will smooth out over time. Stability of government policies is key,” Jayakumar told Mint. “Until we reach an inflection point, subsidies, incentives and tax breaks must continue. Once we reach scale, costs will naturally come down.”

“For example, battery costs have fallen significantly over the past decade, bringing electric vehicles closer to affordability. Powertrain localization is another key area,” he said. “While we still rely on imports, we are increasing localization efforts year after year and will continue to make progress in 2026, 2027 and 2028. As localization increases, costs will fall further.”

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He expects the development of the electronics ecosystem, supported by industry efforts and government initiatives, to help make electric vehicles more cost-competitive.

“Over time, the price of electric vehicles will be on par with internal combustion engine vehicles. Today, electric vehicles still rely on government subsidies to close the price gap.” Jayakumar said. “But when you consider the total cost of ownership (taking into account lower running costs), electric vehicles are already the better and greener option.”