As EVs Catch On, Foreign Auto Firms Seeking Stable Footing In India: Report

High taxes, price-conscious consumers, and tricky logistical issues have made it tough for many foreign carmakers to thrive in on Indian market

EV sales in India stood at just 49,800 units last year, accounting for only 1.3 per cent of the 3.8 million passenger vehicles sold.

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The transition from ICE vehicles to electric vehicles (EVs) in India is giving carmakers, whose conventional petrol, diesel cars have failed to make a mark in the country, a second chance, as reported by Bloomberg. High taxes, price-conscious consumers, and tricky logistical issues have made it tough for many foreign carmakers to thrive in on Indian market. According to the report, with the advent of EVs, companies such as MG Motor India Pvt, the local unit of China’s SAIC Motor Corp., Renault SA, Nissan Motor Co, and Volkswagen AG may finally gain a better foothold.

While MG Motor controls just a fraction of the local passenger vehicle market, last month it announced ambitious 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, most of them pure electric.

MG Motor is also building a second factory to make EVs, with an investment of Rs 50 billion ($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 Gujarat. On top of that, it plans to dilute its 100 per cent shareholding of its local unit with the aim of having it majority owned by an Indian firm in two to four years.

In May, Hyundai Motor India said it will invest Rs 200 billion into EV 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.

EV sales in India stood at just 49,800 units last year, accounting for only 1.3 per cent 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. (BNEF, in its latest long-term EV outlook, lumps India into the ‘late’ category when looking at the possibility of achieving a full phase-out of ICE car sales by 2038, noting that it’s currently not on track for net zero emissions in the passenger car segment by 2050.

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

Tesla Inc with senior executives visiting India last month to discuss the possible local sourcing of components. They also spoke with federal government officials about incentives in a bid to diversify Tesla’s supply chain beyond China, sources familiar with the matter said.

Renault and Nissan too are planning to invest around $600 million in India to expand their car line-up, including two electric models, in addition to decarbonizing a manufacturing plant in Chennai.