Why do all electric vehicle companies occupy Warehouse and Industrial space in Hosur?
Why do all electric vehicle companies occupy Warehouse and Industrial space in Hosur

With the electric buzz that has taken the nation by storm, the Government is planning to develop EV parks in the same line as SEZ and pharma parks across the country. The EV park aims to house majority original equipment manufacturers, battery manufacturers, and charging infrastructure developers at one place. With the vision to develop an entire ecosystem at one same place, the Government plans to offer plug-and-play business models to EV industries who will set up their units in these parks. One such park is located in north western districts of Tamil Nadu, just across the Karnataka border from Bengaluru, which houses a number of new-age EV companies, such as, Ather Energy, Ola Electronics, Simple Energy, among others.

The Rise of Hosur

Several factors have helped the Hosur belt boom with several big-ticket projects and investments in the region. The cluster witnessed two substantially high profile investments in the last couple of years, with Tata electronics setting up a ₹5,000-crore mobile components plant at Udhanapalli, and Ola, a ₹2,500-crore electric vehicle (EV) plant at nearby Pochampally. These massive investments triggered the new EV boom in Hosur, with EV companies preferring Hosur for putting up their manufacturing units given a competent ancillary supplier network, proximity to Bengaluru where corporate offices of these companies are located, plus amicable and skilled labour force in two-wheeler, automotive, and electronics segment.

Well-oiled Supply-chain Network

The region is equipped with a strong supply-chain ecosystem, making it easier for the companies to locally source components necessary for manufacturing and assembly. This, in turn, would help us in improving cost and time efficiency for the businesses. Moreover, companies are prompting tier-2 suppliers to move their base to Hosur area, to make smaller components in the close vicinity to further add to the efficiency.

Financial SOP and Easier Admittance

EV companies in the Hosur area are upheld by EV policy contrived by Tamil Nadu Government. The policy is drafted to support EV companies with repayment of SGST for electric vehicle producing, capital appropriation for battery fabricating, business motivation as far as repayment of EPF for a time of one year, exclusion from instalment of Electricity Tax till 2025 and 100 percent stamp obligation exception.

Proximity to Bengaluru

As most of the corporate offices are located in Bengaluru, the first preference of companies is to put up a plant within a comfortable driving distance from head office. As most of the senior employees and mid-level management sit at the head office, most of the companies want employees to be able to move between the office and the plant in an hour or so maximum. For instance, Ather Energy corporate office is located in Koramangala, which is 60 minutes away from the Ather Energy plant in Hosur. Moreover, the connection via Electronics city flyover helps cut through the traffic, which was initially the pain point of employees moving between Koramangala and Whitefield, where Ather Energy plant was located.

Availability of Land and Scalability Scope

Given the area related bottleneck in Bengaluru, it is essential for EV companies or any other manufacturing units to look into areas nearby that can accommodate projected production capacity and growth plans. Given, land investments are not made again and again, it is always advisable for the companies to take up the area based on the most optimistic business projections. With the same thought, Ather Energy Hosur plant is spread across 300,000 Sq. Ft.  with capacity to produce 1,10,000 scooters annually. Ather Energy envisions that the plant will serve as Ather Energy’s national manufacturing hub, catering to demand from across the country. Moreover, the plant is nearly 10 times the capacity of the Whitefield, Bengaluru, plant.

Hosur Historic Precedence

Within the close proximity to Bengaluru, Hosur area has historically been a dominant space for two wheeler, automotive, and electronics business segments. Given that EV is primarily an amalgamation of these three segments, it is therefore a natural choice for EV companies to develop manufacturing units in the Hosur area. Moreover, with established and consistent access to power, land, and labour relevant to the industry, Hosur is the first choice of investment. Furthermore, a lot of fossil-fuelled automotive industries are also expanding into the EV segment. This has prompted an easy transition for existing automotive companies in the area. Also, as Tamil Nadu has over 800 engineering colleges, the state offers an intellectual and skilled labour pool ensuring steady stream for the workforce.

Amicable Labour and Supportive Workforce

In the area, it is widely noted that the kind of labour unrest Bengaluru witnesses is not seen in the Tamil Nadu north western districts, which are barely an hour away from each other. The most plausible reason for this could be the existential automotive businesses in the Hosur area, unlike Bengaluru, where labourers are experiencing the automotive industry for the first time. In Hosur, both industry and labour have matured, and the companies have learnt that exploitative practices are rather counter-productive. Therefore, most of the EV companies find this a huge draw in making investment decisions in the Hosur area.

Hosur Meteoric rise and the way ahead

Given the reasons above along with a network of highways facilitating logistics of movement and the welcoming policies set by the Tamil Nadu Government for automotive companies, Hosur belt is emerging as an industrial bowl for the electric vehicle manufacturers. Tata, Delta, Ola Mobility, Ather Energy, and Simple Energy are some of the big names in the electronics and electric vehicle (EV) sectors that have made Hosur and the surrounding districts their home in the past few years.

Along with growing awareness and spiralling petrol prices, the demand for EV is set to increase significantly in the coming years. As per the data, In January 2022, overall high-speed EV two-wheeler registrations rose to 27,563 units as compared to 24,725 units in December 2021. To match the rising demand, manufacturers have to up their capacity, for example Ather Energy recently commissioned its second facility in Hosur to increase its capacity from 1,20,000 units to 4,00,000 units. Ola Electric has set out to build the world’s largest EV facility with an initial annual capacity of two million units. Furthermore, TVS has also decided to invest over 1,100 crores in the area for the new EV plant.  If the cards are played right, this belt could further emerge as a global player given the fast adoption of EVs, especially in the two-wheeler segment.

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