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Machinery Loan: How Machine Tool Industry is Affected by Electric Vehicle Manufacturing | EFL

With the increase of electric motors as opposed to combustion engines, the automotive industry is facing a huge decrease in demand. This decrease is causing uncertainty amongst suppliers of combustion engines.

So how does this affect the machine loan and tool industry? Will combustion engines and electric motors be capable of ever existing in harmony?

Frankly, the mass production and integration of electric vehicles will have impacts on the machine tool industry on a number of fronts including labor, supply chain structure, competition, etc. This is mainly due to the fact that there are simply lower manufacturing demands from the electric vehicle industry.

Electric motors means there is no need for components such as exhaust systems, pistons, valves, exhaust headers, etc.

Machine tool manufacturers who produce component-specific supplies are the ones who are at most risk because they are highly dependent on the combustion engine market. The decrease in demand might not be enough to support the number of machine tool manufacturers.

The Govt. of India has also offered subsidies to electric vehicle manufacturers in order to encourage mass adoption of these vehicles. Manufacturers and consumers of electric vehicles are being offered attractive incentives. The incentive levels range from 13% to 16% of the average selling price.

Though there is a decrease, the machine tool industry is not expected to completely vanish. Several other components will continue being produced such as locomotives, heavy-commercial trucks, marine vessels, aircrafts, farm equipment, etc. And the good news is, combustion engines will still be in demand with the increase in hybrid vehicles (electric motors and combustion engines).

Though the transition to electric vehicles will be a difficult one for the machine tool industry, the actual demand for these vehicles will pick up quite slowly. Which is why, experts estimate that the combustion engines business will still have quite a large market share by 2030.

IEA’s Global EV Outlook 2019 predicts that EVs will make up approximately 15% of global car sales by 2030, based on announced policy decisions.

Oxford Economics analysed the impact of rising EV penetration across 26 countries by ‘comparing machine tool consumption in our baseline against a scenario that assumes zero penetration of EVs and, hence, zero impact of EVs on the machine tool demand.’

Therefore, though electric vehicle manufacturing can affect the machine tool industry, there’s still a long way to go and no need to worry!

If you’re looking to buy used or new machinery without collaterals in an easy way, you can apply for EFL’s machinery loans.

A machine loan is perfect for those businesses that want to stay up to date with the trends and achieve business success.

Benefits of EFL machinery loans:

  1. We offer a maximum machine financing amount upto 75% of equipment value or Rs.3 Cr.
  2. 5 year machine loan term.
  3. Flexible interest rate based on customer profile.
  4. Machine financing disbursement within 7 days.
  5. No additional collateral!

Apply for a machine loan through EFL and help your business thrive!


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