Over the last few years, the narrative around the automobile industry’s move to electric vehicles (EVs) has changed drastically. What was once viewed as an irresistible and speedy transition to full electrification is now seeing substantial slowdowns, with major automakers reconsidering their aggressive EV timelines. General Motors, Ford, Toyota, and Audi—companies that formerly pushed for an all-electric future—have either postponed, scaled back, or revised their EV production plans in reaction to changing market conditions.
The key causes of this unexpected pullback are primarily due to lower-than-expected consumer uptake, growing production costs, supply chain issues, and infrastructural limits. Despite the governmental push to accelerate EV adoption, market reality tells a different story. Automakers are finally acknowledging that internal combustion engine (ICE) vehicles will continue to be an important part of the industry for the foreseeable future, requiring a rethinking of investment priorities.
This transition confronts gear makers with both challenges and possibilities. While the initial intention was for a rapid reduction in ICE-related manufacturing, the continued demand for traditional powertrains requires manufacturers to take a more balanced, strategic approach—one that serves current ICE needs while preparing for a more gradual EV transition.
This transition puts both challenges and possibilities in front of the gear makers. While the initial intention was for a rapid reduction in ICE-related manufacturing, the continued demand for traditional powertrains requires manufacturers to take a more balanced, strategic approach—one that serves current ICE needs while preparing for a more gradual EV transition. Understanding these market shifts is critical for making informed decisions on production, R&D, and long-term investments. Although it may not be immediately visible or obvious in present market emotions, quarterly reports from vehicle makers will eventually reveal it. The only positive EV trend in India is in the two-wheeler segment, which accounts for a sizeable portion of the entire automotive market.
India’s electric vehicle (EV) market has grown significantly over the last three quarters, with sales exceeding 2 million units in 2024, a 24% increase over the previous year and bringing EV market penetration to 8%. The two-wheeler segment led the spike, reaching 7.3% penetration, while electric three-wheelers increased their market share to more than 22%. October 2024 set a new record with 219,548 EVs sold, largely for two- and three-wheelers. Uttar Pradesh, Maharashtra, Karnataka, Delhi, and Rajasthan accounted for more than half of all sales. Despite worldwide concerns about EV demand, Indian automakers want to launch almost a dozen new models in 2025, with a focus on longer range and faster charging to broaden the consumer base.
As the automotive industry faces an uncertain transition, gear manufacturers must reconcile the high demand for ICE vehicle components with the slow acceptance of EV technology. With ICE vehicles continuing to dominate sales, manufacturers must improve traditional gear systems while simultaneously planning for electrified drivetrains. This necessitates an investment in flexible manufacturing facilities that can accommodate both powertrain types, assuring adaptation as market conditions change. Diversification of product portfolios will be critical, allowing manufacturers to support ICE improvements while carefully integrating EV-specific solutions.
Additionally, localisation is becoming more crucial in protecting supply chains, reducing trade risks, and managing variable material costs. Establishing localised production hubs will help enterprises remain competitive and respond to changing market demands. In this mixed-transition phase, gear makers’ primary job will be to preserve efficiency in ICE production while strategically positioning themselves for the long-term evolution of electric vehicle technology.
For gear makers, being competitive requires a balanced and deliberate approach rather than mindlessly following trends that the consumer market has yet to completely adopt. ICE vehicle demand remains high, and while EV adoption is increasing, it is mostly concentrated in the two- and three-wheeler sectors, where price and practicality drive sales. This emphasises the importance for manufacturers to prioritise high-efficiency, long-lasting gears for ICE applications while prudently developing for EV powertrains. Hybrid-specific gear solutions also create a potential, acting as a bridging market between ICE and complete electrification.
Cost-effective innovation should be at the core of the strategy, ensuring that R&D investments in advanced gear technologies align with realistic demand projections. Rather than overcommitting resources to EV-specific designs, manufacturers can leverage their existing expertise in precision gear manufacturing to explore adaptable solutions that serve both ICE and EV applications. Collaboration across the industry will be crucial—engaging with OEMs, lubricant specialists, and bearing manufacturers can help refine powertrain designs, ensuring that any shift toward electrification is technologically and commercially viable. By participating in industry forums and closely monitoring regulatory and market shifts, gear manufacturers can make informed decisions, safeguarding their position in an evolving automotive landscape without unnecessary risks.
The automobile industry is undergoing a complex transition, with ICE vehicles continuing to dominate while EV adoption moves at a steady pace. Gear manufacturers must handle this transition with a planned, adaptive strategy, supporting the ongoing demand for ICE components while investing prudently in EV innovation. The objective is to strike a balance between short-term market realities and long-term technology developments, ensuring that realistic demand rather than speculative trends drive R&D efforts.
A well-planned strategy to engineering, supply chain resilience, and market positioning will be critical to maintaining growth and competitiveness. By focusing on efficiency, durability, and smart diversification, gear manufacturers may not only endure industry swings but also position themselves as key contributors to the changing mobility scene. The future isn’t about choosing between ICE and EV; it’s about preparing for a market that will continue to need both, albeit at different times and scales.
