EVs offer foreign automakers a second chance in India

IFRAME SYNC

India’s transition to electric vehicles is offering a second chance to automakers who failed to succeed with conventional gasoline vehicles. High taxes, price-conscious consumers and thorny logistics have made it difficult for many foreign automakers to thrive in one of Asia’s largest economies. They’re finding it hard to loosen the grip of homegrown players like Maruti Suzuki India Ltd., a household name since the 1980s thanks to its iconic Maruti 800, which became Volkswagen’s first affordable car.

go through: Bloomberg
| Updated on: June 13, 2023 at 09:53 am

Profile photos are for reference only (Associated Press)

But with EVs on the horizon, companies such as MG Motor India Pvt, the local unit of China’s SAIC Motor, Renault Automobiles NV, Nissan Motor Co and Volkswagen AG may end up gaining a better foothold.

While MG Motor controls only a small portion of the local passenger car market, last month it announced ambitious plans to grab a share of the country’s nascent electric vehicle segment, which is expected to account for 40% of its sales in India by 2028. Three-quarters came from EVs through the launch of four to five new models, most of which were pure electric.

MG Motor is also building a second electric vehicle factory, investing 50 billion rupees ($607 million), which will boost its total production in India to 300,000 vehicles a year, and building a battery assembly plant in the western state of Gujarat. On top of that, it plans to dilute 100% of its local subsidiary, with the goal of having an Indian company majority-owned within two to four years.

FYI EV file photo
FYI EV file photo (AFP)

Other international automakers that already have a strong presence in the Indian auto market are using the EV shift to expand their reach. In May, Hyundai Motor India Ltd said it would invest Rs 2,000 crore in the electric vehicle ecosystem in the southern state of Tamil Nadu. This will involve building a battery pack assembly with an annual capacity of 178,000 units, installing 100 charging stations on major highways and launching new electric models by 2032.

Interest from global companies could spur India’s slow EV transition. Sales of electric vehicles were just 49,800 last year, accounting for just 1.3% of the 3.8 million passenger vehicles sold, according to BloombergNEF. The higher cost of EVs compared with internal combustion engine vehicles and the lack of public charging stations has slowed adoption. (In its latest long-term electric vehicle outlook, BNEF puts India in the “late” category when considering the possibility of a complete phase-out of internal combustion engine vehicle sales by 2038, noting that India is not yet on track to net-zero emissions in passenger cars by 2050.)

Still, global automakers are reconsidering India’s huge growth potential as an alternative manufacturing base amid heightened U.S.-China trade tensions. Prime Minister Narendra Modi is taking advantage of changing geopolitics to lure companies with cash incentives to manufacture everything from smartphones to semiconductors in the country.

Volkswagen, Europe’s largest automaker, is a good example. It reportedly plans to electrify 30 percent of its passenger car lineup in India by the end of this decade and could launch its first electric car, the ID.4, next year.

Tesla Inc also appears to be softening after a long standoff, with executives visiting India last month to discuss possible local sourcing of components. They also discussed incentives with federal officials to diversify Tesla’s supply chain outside of China, the people said.

Renault and Nissan also plan to invest about $600 million in India to expand their car lineups, including two electric models, and to decarbonize a manufacturing plant in Chennai.

It won’t be an easy road, but foreigners have a fighting chance given that many local automakers (with the possible exception of Tata Motors Ltd) have yet to embrace EVs in a meaningful way.

First published date: Jun 13, 2023 at 09:53 AM CST

https://auto.hindustantimes.com/auto/electric-vehicles/evs-are-offering-foreign-automakers-a-second-chance-in-india-41686629573300.html

Leave a Comment