India’s EV Industry at Crossroads?

Team ABT–

Bengaluru, INDIA (January 18, 2024) – In recent years, the electric vehicle (EV) landscape in India has witnessed dynamic shifts, with a surge in global interest and advancements in technology. However, a pertinent question looms over the domestic EV manufacturers: Have they lost the plot to their Chinese and Korean counterparts? It’s time to explore the challenges and opportunities faced by Indian EV manufacturers in the face of growing competition, analyse key factors that have shaped the current narrative.

The Rise of Chinese and Korean Players

Chinese electric vehicle manufacturers have experienced remarkable success on the global stage. According to the International Energy Agency (IEA), China is the world’s largest market for electric vehicles, accounting for more than half of global EV sales. Companies like BYD, NIO, and Xiaomi-backed XPeng Motors have not only dominated their domestic market but have also made significant inroads into international territories. The affordability, technological prowess, and aggressive expansion strategies of Chinese companies have posed challenges for Indian manufacturers.

South Korean automakers, particularly Hyundai and Kia, have demonstrated a strong commitment to electric mobility. According to Statista, in 2021, Hyundai Motor Company ranked among the top global electric vehicle manufacturers, with an increasing market share. Their success lies in creating electric models that appeal to a wide range of consumers, coupled with a strategic focus on sustainability and technological advancements.

Indian manufacturers in a quandary?

Indian EV manufacturers, despite early enthusiasm and support from the government, have faced hurdles in achieving the same level of success as their global counterparts. According to the Society of Indian Automobile Manufacturers (SIAM), the sale of electric vehicles in India constituted only a small percentage of the overall automobile market in recent years. Challenges such as limited resources, technological constraints, and a slower pace of infrastructure development have hindered the widespread adoption of electric vehicles within the country.

One key factor contributing to the apparent ‘loss of plot’ by Indian manufacturers is the affordability factor. Chinese EV makers have excelled in producing cost-effective electric vehicles, making them accessible to a broader segment of the population. According to a report by BloombergNEF, the average price of electric vehicles in China is significantly lower than in India. Indian manufacturers must recalibrate their strategies to ensure competitive pricing without compromising on quality.

Technology and Government Support: A Critical Edge

Chinese and Korean manufacturers have been at the forefront of electric vehicle technology, focusing on battery efficiency, range improvement, and smart features. To regain lost ground, Indian manufacturers need to invest heavily in research and development. According to the Global Innovation Index, China and South Korea consistently rank higher than India in terms of innovation, highlighting the need for Indian companies to foster innovation and stay ahead in the race for cutting-edge technology.

The success of electric vehicles is closely tied to government policies and support. While India has initiated measures such as the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, sustained policy efforts and incentives are crucial to encourage both manufacturers and consumers. According to the World Bank, China has implemented a range of policies, including subsidies and incentives, to promote the adoption of electric vehicles. The Indian government needs to align its policies to create a more conducive environment for the growth of the EV industry.

Tata Motors Limited, a prominent organization with a valuation of USD 37 billion, stands as India’s leading global automobile manufacturer, boasting a diverse portfolio encompassing a wide range of cars.

On January 17, Tata Passenger Electric Mobility Ltd (TPEM), a subsidiary of Tata Motors and a trailblazer in India’s electric vehicle (EV) revolution, introduced its inaugural pure EV – the Punch.ev.

Mr. Shailesh Chandra, Managing Director of Tata Motors Passenger Vehicles Limited & Tata Passenger Electric Mobility Limited, shared insights on the Punch.ev launch, stating, “This day marks a significant milestone in India’s EV journey, as Tata.ev propels the nation into a new era of sustainable mobility with the introduction of Punch.ev. Our steadfast commitment to accelerating EV adoption has reshaped the landscape, surmounting barriers with innovative solutions. From the groundbreaking Nexon.ev and Tiago.ev launches to our ongoing efforts in building a robust charging infrastructure, we have transformed perceptions. Now, with the unveiling of Punch.ev, an SUV that transcends everyday expectations, we are elevating our commitment to a new level, delivering a versatile EV aligned with evolving customer needs. The goal is to propel the Indian EV market and propel India into an era dominated by pure EVs.

On January 11, Mahindra & Mahindra entered into a binding agreement with India-Japan Fund (IJF), managed by the National Investment and Infrastructure Fund (NIIF) to invest INR 400 crore (USD 40 million) its last-mile mobility business, encompassing three-wheelers (Alfa, Treo, Zor) and four-wheelers SCV (Jeeto) brands. This latest investment in MLMML marks IJF’s first investment since its establishment in August 2023.

As India endeavors to attract global carmakers like Tesla; Mahindra and Mahindra, along with Tata Motors, is privately lobbying with the government to refrain from lowering the 100% import taxes on electric vehicles, aiming to safeguard domestic firms and their foreign investors.

Collaboration and Global Reach

Chinese and Korean manufacturers have established global partnerships and collaborations, expanding their reach and influence. According to a study by McKinsey, global collaboration is crucial for success in the electric vehicle market. Indian manufacturers should actively seek international collaborations to leverage technological expertise, access new markets, and participate in the global electric vehicle ecosystem.

While the challenges are evident, Indian EV manufacturers must view them as opportunities for growth and transformation. Embracing a collaborative approach, investing in talent, and fostering an ecosystem of innovation can help Indian companies regain their competitive edge. According to a report by NITI Aayog, there is immense potential for job creation and economic growth in the electric vehicle sector, indicating that overcoming challenges in this industry could have widespread positive implications for the Indian economy.

Infrastructure Development: A Decisive Factor

The success of electric vehicles is intrinsically linked to the development of robust charging infrastructure. Indian manufacturers, in collaboration with the government and private stakeholders, should accelerate efforts to establish an extensive and reliable charging network. According to the World Economic Forum, China leads the world in electric vehicle charging infrastructure, highlighting the need for India to catch up and mitigate concerns related to range anxiety.

While challenges persist, they also present an opportunity for transformation and growth. Indian manufacturers must leverage their unique strengths, collaborate globally, and align with the evolving dynamics of the electric vehicle industry. With concerted efforts, a commitment to innovation, and strategic partnerships, Indian EV manufacturers can not only regain lost ground but also play a pivotal role in shaping the future of sustainable mobility.