Bumpy road ahead for MSMEs as they try to sell to the EV industry Premium

While the electric vehicle supply chain holds potential for MSMEs and startups, it is not an easy drive; from access to finance and technology to availability of skilled workers, there are several roadblocks for these entrepreneurs.

COIMBATORE

Vijayan Srinivasan of Eco Dynaamic in Coimbatore is into the manufacturing of electric three-wheelers for more than a decade and has sold over 4,000 vehicles that are operated within the premises of the buyers. It is only in 2022 that Tamil Nadu came out with a policy for electric three-wheelers and there are a lot of challenges even now in getting approval for commercial sale of e-rickshaws, he says.

Manikandan Palanimuthu, Chief Executive Officer of Greenerg Mobility Solutions, is one of the few electric vehicle (EV) startups in Coimbatore that has raised funds and develops displays for electric vehicles. Its additional requirement is almost ₹100 crores. “We develop a new model almost every six months,” he says. However, a customer suddenly stops purchasing a particular model because of the change in product requirement and safety norms and the stocks of the older models become a financial burden on the company, he says.

Vijayan and Manikandan are among the early entrepreneurs in the growing ecosystem of startups in the EV space in Coimbatore, which is one of the major micro, small and medium enterprises (MSME) clusters supplying components to the conventional automobile sector. While the EV supply chain holds potential for MSMEs and startups, it is not an easy drive, they say.

From access to finance and technology to availability of skilled workers, there are several roadblocks for these entrepreneurs.

Under the second phase of FAME India Scheme, which gives away ₹6,825 crores in incentives, over 16.17 lakh electric vehicles, including 14.69 lakh two-wheelers and 1.78 lakh three-wheelers, have been sold in India till February 19, 2025.

Earlier, there were just a handful of big names that were selling internal combustion engine (ICE) two-wheelers. More than 300 brands sell electric two-wheelers now across the country. Most of them prefer to source their component needs from the existing suppliers in the automobile vertical as these MSME units know the quality standards and the general requirements of the industry, says a Bengaluru-based electric two-wheeler manufacturer, indicating the potential for MSMEs that are already in the automobile supply chain or those that want to enter this industry.