According to research from Bain & Company, the Indian electric vehicle (EV) market is set to motor, having soared 200% in 2022 to 1m vehicles.
Within this, the penetration of electric 2 and 3 wheelers is forecast to climb to more than 40% of the market by 2030 (from 2% last year) and to between 15% and 20% for 4W vehicles (from 1% LY). By that time, there should be more than 12m new 2W/3Ws and 1m 4W EVs sold annually (see below). That represents a cumulative $76bn–$100bn annual revenue opportunity, which is estimated to deliver EBIT of $8bn–$11bn.
But how can investors profit this secular growth? One way could be via Saietta Electric Drive (SED), which said today that it is partnering with AVTEC Limited, one of India’s largest makers of powertrain and precision-engineered products with current annual revenues of $2.8bn.
The deal brings together AVTEC’s transmissions with Saietta's emotors and inverters to deliver best-in-class eDrive systems for 3 and 4 wheelers including rickshaws and urban delivery vans as well as cars.
These 48V-96V end-to-end solutions will be manufactured locally, jointly promoted, and are lightweight, compact and cost competitive - all key USPs in this buoyant market.
Initial production volumes of 80,000 units in the first five years are earmarked for one of the largest Indian light duty OEMs, with delivery on track to commence in Q3 2023. If successful, the agreement could also be later expanded to 2-wheelers. India is currently the largest producer of 2- and 3-wheelers globally.
Executive Chairman Tony Gott commented: "When bringing any new technology to the mass market, it’s critically important to work with supplier partners, who have a proven track record of delivering at the required scale, on time, on cost and on quality.
"AVTEC undoubtedly ticks every one of those boxes. We’ve been collaborating very effectively technically since Q3 last year and everything is on track for our planned start of production."
"Saietta VNA’s collaboration with AVTEC Limited is a significant step towards delivering our strategy for India. Working in partnership with AVTEC, we will benefit from their transmission expertise whilst we focus on our core competencies of motor and inverter development to ensure that together we deliver high quality eDrive solutions to our customers in India and beyond. We are also committed to working together commercially to promote the features and benefits of our combined technology to our existing client bases.”
Elsewhere, Saietta is progressing another ten OEM pipeline opportunities at various stages from request for quote, right through to final selection – representing a possible 2m units by FY28.
That has important implications for forecasts. Currently, broker Canaccord Genuity is anticipating revenues to jump from £4.3m last year to £6.0m, £12.1m & £36.0m over the next 3 years, to deliver EBITDA of £12.0m by 2025, alongside a trough net cash position of £2m (from £11m as of Feb 2023) and a 120p a share valuation, from the current 20.75p.