USD 323 Bn Investment Needed To Decarbonise Transportation Sector By 2070 To achieve this target, automobile financing will need to increase by 2-18 per cent unitl 2070 to address potential funding shortfalls in the industry.
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The Original Equipment Manufacturers (OEMs) will have to invest USD 323 billion to decarbonise the transportation sector. This investment could generate revenue of USD 14.1 trillion for OEMs until 2070, CSI said in its report,
According to the report, India's Auto Industry: Mapping the Course to Net Zero by 2070, achieving net zero by 2070 will require an increase in investment from USD 7 billion in the five years ending in 2025 to USD 70 billion in the five years ending in 2070.
"The largest share of investments – amounting to around USD 263 billion until 2070 – is likely required in the four-wheeler category. Additionally, truck manufacturers are anticipated to invest over USD 45 billion by 2070 to meet domestic demand," it stated.
It further stated, "OEMs have the potential to generate significant revenue by decarbonising, with an estimated opportunity to earn USD 14.1 trillion until 2070. Cars will likely make the largest contribution, representing USD 10.3 trillion over the next 50 years."
As per these estimates, trucks or commercial vehicles will be the second-biggest revenue makers for OEMs, with almost USD 1.9 trillion, representing 15 per cent of the total opportunity, accruing over this period.
It is estimated that EV OEM's annual revenue to rise from USD 1.6 billion in 2025 to around USD 502 billion by 2070 as these vehicles are expected to experience substantial growth in the upcoming years, particularly in the two-wheeler and three-wheeler categories.
"By 2030, it is estimated that EVs will contribute 7.5 per cent of the total OEM automobile sales revenue. After 2030, we expect cars to become the largest revenue contributor, contributing over USD 8 trillion in sales during 2020–2070, accounting for 83 per cent of total EV revenues," the report added.
With rise in demand of electric vehicles in the coming years, the report suggests that the average annual demand for battery replacements may increase significantly from almost nothing in 2025 to about 788 GWh by 2070.
"We expect that by 2030, electric two-wheeler sales will drive the demand for batteries to 117 GWh, out of the total EV battery demand of 225 GWh. When it comes to the sale of new vehicles, cars are expected to be the largest consumers of batteries by 2035. However, two-wheelers may still have a higher demand for battery replacements, as there is a larger stock of older vehicles in India," the report stated.
Meanwhile, automobile financing will need to increase by 2-18 per cent unitl 2070 to address potential funding shortfalls in the industry.
"The EV market could provide banks and other financial institutes (FIs) a USD 9.6 trillion opportunity to finance the purchase of new EVs until 2070. The annual financing requirements will rise from USD 45 billion in 2025 to around USD 410 billion by 2070 across vehicle categories," it said.
