The shift towards electric vehicles in India is offering a new lease of life for automakers who have struggled to make a mark with traditional gasoline cars.
This presents an opportunity for companies who have faced challenges due to high taxes, price-sensitive consumers, and difficult logistics in one of Asia's largest economies.
With the advent of electric vehicles (EVs), firms such as MG Motor, Renault, Nissan, and Volkswagen, and the local unit of China's SAIC Motor that have previously faced difficulties, can finally establish a better foothold in the Indian market.
While MG Motor currently holds a small percentage of the local passenger vehicle market in India, it recently announced its intention to gain a portion of the existing EV space within the country.
The automaker aims to achieve up to 75 per cent of its sales from electric cars by 2028 through the launch of four to five new models.
MG Motor is also building a second factory to make EVs, with an investment of $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, as per an Economic Times report.
It intends to dilute its 100 per cent shareholding in its local unit to allow majority ownership by an Indian firm within the next two to four years.
Despite the potential benefits of electric vehicles, sales in India have been slow to take off, with only 1.3 per cent of the 3.8 million passenger vehicles sold last year being electric.
Factors such as the higher cost of electric vehicles compared to traditional cars and the limited availability of public charging spots have contributed to this.
However, as the US-China trade tensions mount, global automakers looking for new manufacturing bases are revisiting India for its vast growth potential and as an alternative manufacturing base.
Hyundai Motor India recently announced they will be investing Rs 20,000 crore into an electric vehicle ecosystem in Tamil Nadu.
The investment will include 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.
Volkswagen, has announced its plans to electrify 30 per cent of its passenger vehicle lineup in India by the end of the decade.
The company is also exploring launching its first electric vehicle — the ID.4 — in India in the coming year.
Tesla, has also shown interest in the Indian market and has initiated talks with local suppliers to source components.
Renault and Nissan are the latest automakers to join the electric vehicle race in India. The companies have announced plans to invest around $600 million in India to expand their car lineup and introduce their electric vehicles
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