The Indian government is actively promoting the production of electric vehicles (EVs) and localizing supply chains to help achieve a goal of 30% EV penetration by 2030. A recent report from S&P Global Ratings highlights that both the Tata and JSW groups are expected to invest more than $30 billion in EVs and related materials over the next decade, with around $10 billion allocated for South and Southeast Asia.
India's position as the world's most populous country offers significant market potential, drawing substantial investments in the EV sector. The adoption of EVs is anticipated to increase as manufacturers launch new models that are more competitively priced against internal combustion engine (ICE) vehicles, alongside improvements in charging infrastructure.
The report also emphasizes that hybrids and vehicles powered by compressed natural gas will likely gain a significant market share, especially in light vehicles and passenger commercial vehicles.
To support this transition, the government has launched the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme, which has a financial allocation of ₹10,900 crore over two years. This initiative aims to accelerate EV adoption and develop essential charging infrastructure, paving the way for a cleaner, more sustainable future.
The transition from ICE vehicles in India is projected to focus more on alternative fuels before fully embracing electrification. Additionally, government policies regarding imports and foreign investments are expected to be crucial in driving India's vehicle electrification.
Korean automakers Hyundai Motor Co. and Kia are increasingly focusing on the Indian market, which constituted about 12% of their global sales volume in 2023. Hyundai is committed to investing in local EV production, with plans to launch its first fully electric model made in India by January 2025.
The company recently completed an initial public offering in India, and part of the proceeds will be directed towards enhancing growth and product offerings in this market.
Tata Motors, another key player, has the financial capability to pursue significant EV investments. In September 2024, the company announced plans to invest approximately $1 billion in a new EV plant in Tamil Nadu. Additionally, its parent company, Tata Sons Pte. Ltd., is investing in a lithium-ion battery plant in Gujarat, which will initially have a capacity of 20 gigawatt hours. This facility is expected to bolster the EV supply chain in the region.
The report forecasts that rated carmakers will collectively invest over $20 billion in developing EV production facilities in South and Southeast Asia in the coming years.
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