Saturday, April 6, 2024

EVs Offer Foreign Auto Companies another chance in India

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High taxes, price-conscious consumers and tricky logistical issues have made it tough for many foreign carmakers to thrive in one of Asia’s biggest economies. But with the advent of EVs, firms like MG Motor, the local unit of China’s SAIC Motor, Renault, Nissan and Volkswagen may finally gain a better foothold.

EVs

India’s transition to electric vehicles is giving automakers whose conventional gasoline cars have failed to make a mark a second chance.

High taxes, price-conscious consumers and tricky logistical issues have made it tough for many foreign carmakers to thrive in one of Asia’s biggest economies. But with the advent of EVs, firms like MG Motor, the local unit of China’s SAIC Motor, Renault, Nissan and Volkswagen may finally gain a better foothold.

While MG Motor controls a fraction of the local passenger vehicle market, last month it announced plans to grab a share of the country’s budding EV space, expecting to derive as much as three-quarters of its sales in India from electric cars by 2028 via the launch of four to five new models.

MG Motor is also building a second factory to make EVs, with an investment of USD 607 million, that would increase its combined production output in India to as many as 300,000 cars a year, and constructing a battery assembly unit in the western state of Gujarat. It plans to dilute its 100% shareholding of its local unit with the aim of having it majority owned by an Indian firm in two to four years.

Other international automakers that already have a chunk of the Indian car market are taking advantage of the EV shift to expand their presence.

In May, Hyundai Motor India said it will plow INR 20,000 crore into an electric vehicle ecosystem in Tamil Nadu. That will involve setting up a battery pack assembly with an annual capacity of 178,000 units, installing 100 charging stations on major highways and introducing new electric models by 2032.

Global firms’ interest may galvanize India’s EV shift.

EV sales stood at just 49,800 units last year, accounting for only 1.3% of the 3.8 million passenger vehicles sold, according to BloombergNEF. The higher cost of EVs versus internal combustion engine cars and few public charging spots have slowed adoption. Still, as the US-China trade tensions mount, global automakers are revisiting India for its vast growth potential and as an alternative manufacturing base.

Volkswagen is a case in point. It’s reportedly planning to electrify 30% of its passenger vehicle lineup in India by the end of this decade and potentially launch its first electric car, the ID.4, there next year.

Tesla, after a long standoff, appears to be softening, with senior executives visiting India last month to discuss possible local sourcing of components.

Renault and Nissan too are planning to invest around USD 600 million in India to expand their car lineup.

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Also read: Honda Elevate SUV Makes Global Debut in India

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