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The Star
a day ago
- Automotive
- The Star
Can Tesla, VinFast and other foreign EV firms thrive in the Indian market?
NEW DELHI: As growth in electric vehicle (EV) sales slows down in the US and Europe, competition is accelerating in India's nascent electric car market with the entry of billionaire Elon Musk's Tesla and Asian carmakers, such as Vietnam's VinFast and China's Leapmotor. India is the world's third-largest car market in terms of domestic vehicle sales, and it is predicted to overtake the US and China to become the largest by 2030. The government hopes that electric cars will make up 30 per cent of total car sales by then, up from a mere 2.5 per cent out of the 4.3 million cars sold in 2024. But India is also a challenging market with price-conscious consumers, limited charging infrastructure, difficult road conditions and high import duties on foreign cars. Tesla drove into the Indian market in July with two variants of its Model Y, a popular electric sport utility vehicle (SUV), which come with a hefty starting price tag of around US$70,000, compared with just US$37,490 in the US, according to Forbes India. A key reason was the import duty, which can rise to 110 per cent, making the SUV more expensive in India than in many other countries. Tesla, which is currently operating in Mumbai and plans to expand to Delhi, is testing the market, said Srihari Mulgund, India new age mobility partner at EY-Parthenon India, a consulting company. 'They are trying to see how the market perceives the product. There will be learning, and it will help them develop an India product strategy,' he noted. The government is working to expand infrastructure for charging EVs, which will be key to their acceptance. More than 12,000 EV charging stations were in use nationwide in 2024, and the government aims to have 3.9 million by 2030. Leading up to Tesla's entry on July 15, Musk had criticised the high import duties, remarking that they were 'the highest in the world by far, of any large country'. The US is negotiating lower automotive tariffs as part of the India-US trade deal. Tesla, which competes in the luxury EV sector, has ruled out manufacturing in India, according to Heavy Industries Minister H. D. Kumaraswamy. Operating on a different model in another part of the cost spectrum is Vietnamese EV-maker VinFast, which was named one of Time's 100 most influential companies in 2024. It is taking orders for two premium SUVs, which will be priced in the range of 1.8 million rupees (US$20,561) to 3.5 million rupees, according to Indian media reports. VinFast opened its first showroom in the city of Surat, in the western state of Gujarat, on July 27, and its second in the city of Chennai, in the southern state of Tamil Nadu, on Aug 2. It has also tied up with local partners to create a charging network and for after-sales service, with plans to launch 35 dealerships by the year end in 27 cities. According to VinFast's press release, its car assembly plant in Tamil Nadu is the company's third operational facility globally. The facility, which is part of a 160 billion rupee investment pact inked between VinFast and the Tamil Nadu government in 2024, will initially make 50,000 vehicles per year. VinFast Asia chief executive Pham Sanh Chau told NDTV news channel: 'This plant lays a solid foundation for us to make Tamil Nadu not just a manufacturing hub for India, but also VinFast's largest export base for South Asia, the Middle East and Africa.' Puneet Gupta, director for India and Asean markets at S&P Global Mobility, said: 'Tesla and VinFast will both serve as catalysts in driving up EV market share in India. They are expected to attract greater attention from consumers towards electric vehicles and help increase confidence in EV technology.' Chinese automobile start-up Leapmotor's electric cars are also being launched in India, by multinational automotive manufacturing corporation Stellantis, which will assemble the vehicles. India is hoping that such assembly plants, which are at the lower end of manufacturing, will be the starting point for building a manufacturing ecosystem of EVs. While domestic EV manufacturers are keen to protect their turf, the government is encouraging foreign carmakers to come to India and make it their EV manufacturing hub in the region. In 2024, 99,165 electric cars were sold, which is a 20 per cent increase over the previous year, according to the Federation of Automobile Dealers Associations. EV growth in India has been led by two- and three-wheelers that accounted for a majority of the over two million EVs sold in 2024. The growth is not coming from the entry-level segment, but SUVs – where cars start at around one million rupees – and the premium segment. Consumers with more purchasing power, who own more than one car and are aware of environmental concerns, are likely leading the trend, said analysts. When Surinder Gera decided to replace his 11-year-old diesel car with an electric SUV, he spent as much time convincing his 21-year-old son, with whom he runs the family clothing manufacturing business, as he did researching cars and the charging infrastructure. The family already owns a petrol car. 'He told me it's too much of a risk, as we travel a lot for our business. But I convinced him. I wanted to bring down my family's carbon footprint,' said the 47-year-old businessman, who is based in the northern Indian city of Ludhiana. In addition, Gera charted every location he had visited in the last five years to see whether charging stations were present along each route. He settled on an SUV made by domestic automobile company Mahindra & Mahindra, which fell within his budget. Mahindra's electric car line-up starts at around 1.5 million rupees. Unlike in other parts of the world, where Chinese EV companies have been rapidly increasing their market share, domestic manufacturers dominate the market in India. China's BYD's, the world's biggest EV-maker, had a US$1 billion investment plan rejected in 2023 amid geopolitical tensions between India and China. So BYD scaled down its plans for India and relies on its assembly plant in the southern city of Chennai, which has an annual capacity of 10,000 to 15,000 units. BYD also imports many of the cars it sells in India. Things may improve for Chinese companies as China and India seek to repair ties following a 2020 clash on their border. Tata leads with over half of the market share in the electric car segment, followed by MG Motor, which is a joint venture between India's JSW Group and China's Saic Motor. They are followed by Mahindra & Mahindra and China's BYD. Tata Motors, which once had a 70 per cent share, is finding its dominance in the Indian market challenged as more competitors come in with new car models and offer innovations like allowing buyers to lease EV batteries. In response, Tata Motors plans to have around 15 models by 2030. Mahindra & Mahindra in 2024 also announced plans to introduce seven new EVs by 2030. Newcomers face a squeeze between the competition and aspirational buyers who want multiple features at a low price, said EY's Mulgund. 'India is a very heterogeneous market. There is the rural and urban divide. Building up a dealership and service is no mean feat, and finding the right partners takes time. It can be built, but it's a longer gestation period,' he said. 'The (EV) market is not massive. Price becomes a critical part of any proposition. Indian customers are also ambitious. They want a car at the right price point but want all the bells and whistles. That is a difficult proposition to beat. You need a certain level of scale to deliver that.' In order to push foreign carmakers to manufacture in India, the government in 2025 launched the Scheme to Promote Manufacturing of Electric Passenger Cars in India. Under the scheme, Customs duty is cut to 15 per cent, provided that automakers invest a minimum of 41.5 billion rupees within three years. They can then import 8,000 electric cars with a cost, insurance and freight value of US$35,000 subject to the 15 per cent tax per car. So far, Tesla has not shown interest, while other car manufacturers such as Mercedes-Benz, Skoda-Volkswagen, Hyundai and Kia have indicated interest, according to Kumaraswamy, the minister. Volvo Car India's managing director Jyoti Malhotra told news agency Press Trust of India that, given the level of investment required, the company would do best to continue to assemble its cars in India, as it is doing, for now. "As more benefits are seen, and we anticipate bigger scale, then we can evaluate others," he said. For India, going electric is an environmental imperative, given how pollution levels are climbing in its urban centres. According to the World Air Quality Report 2024 by Swiss air-quality technology company IQAir, Delhi is the most polluted capital city in the world and India is the world's fifth-most polluted country, down from No. 3 in 2023. Vehicular emissions contributed 51.5 per cent to Delhi's pollution. Delhi has banned 10-year-old diesel and 15-year-old petrol cars, and on July 1, banned even the refuelling of such cars. Anumita Roychowdhury, executive director of research and advocacy at the Centre for Science and Environment, said: 'For India, electrification is not just an opportunity to clean up the environment, but it is also an industrial opportunity.' She noted that the government, apart from implementing manufacturing schemes needed to strengthen charging infrastructure, also needed to incentivise consumers more, citing measures like free parking for EVs. 'In India, you require industry to develop its manufacturing capacity adequately. You need a supply chain of critical minerals and battery manufacturing. But the supply chain will evolve only if the (automobile) industry perceives there is a demand in the market. Both have to go hand in hand.' - The Straits Times/ANN
Straits Times
2 days ago
- Automotive
- Straits Times
Can Tesla, VinFast and other foreign EV firms thrive in the Indian market?
Sign up now: Get ST's newsletters delivered to your inbox Police officers directing traffic outside the Tesla showroom ahead of its opening in Mumbai, India, on July 15. – As growth in electric car (EV) sales slows down in the US and Europe, competition is accelerating in India's nascent electric car market with the entry of billionaire Elon Musk's Tesla and Asian carmakers such as Vietnam's VinFast and China's Leapmotor. India is the world's third-largest car market in terms of domestic vehicle sales, and it is predicted to overtake US and China to become the largest by 2030. The government hopes that electric cars will make up 30 per cent of total car sales by then, up from a mere 2.5 per cent out of the 4.3 million cars sold in 2024. But India is also a challenging market with price-conscious consumers, limited charging infrastructure, difficult road conditions, and high import duties on foreign cars. Telsa drove into the Indian market in July with two variants of its Model Y , a popular electric sport utility vehicle (SUV), which come with a hefty starting price tag of around US$70,000 (S$90,000), compared with just US$37,490 in the US, according to Forbes India. A key reason was the import duty, which can rise to 110 per cent, making the SUV more expensive in India than in many other countries. Tesla, which is currently operating in Mumbai and plans to expand to Delhi, is testing the market, said Mr Srihari Mulgund, India new age mobility partner at EY-Parthenon India, a consulting company. Top stories Swipe. Select. Stay informed. Singapore Over 118,000 speeding violations in first half of 2025; situation shows no signs of improvement: TP Singapore Israel's plan to step up Gaza offensive dangerous and unacceptable: MFA Singapore Four men arrested in Bukit Timah believed to be linked to housebreaking syndicates Singapore Criminal trial of Hyflux founder Olivia Lum and five others starts Aug 11 Singapore Why some teens cook despite Singapore's da bao culture Singapore Man arrested over hacking attempt on RedeemSG portal Singapore 'We could feel the heat from our house': Car catches fire in Bidadari area Asia 'Pain in the neck': Cable theft on the track derails train speed and schedules in Malaysia 'They are trying to see how the market perceives the product. There will be learning, and it will help them develop an India product strategy,' he noted. The government is working to expand infrastructure for charging EVs, which will be key to their acceptance. More than 12,000 EV charging stations were in use nationwide in 2024, and the government aims to have 3.9 million by 2030. Leading up to Tesla's entry on July 15, Mr Musk had criticised the high import duties, remarking that they were 'the highest in the world by far, of any large country'. The United States is negotiating lower automotive tariffs as part of the India-US trade deal. Tesla, which competes in the luxury EV sector, has ruled out manufacturing in India, according to Heavy Industries Minister H.D. Kumaraswamy. Operating on a different model in another part of the cost spectrum is Vietnamese EV-maker VinFast, which was named one of Time's 100 most influential companies in 2024. It is taking orders for two premium SUVs, which will be priced in the range of 1.8 million rupees (S$26,500) to 3.5 million rupees, according to Indian media reports. VinFast opened its first showroom in the city of Surat, in the western state of Gujarat, on July 27 and its second in the city of Chennai, in the southern state of Tamil Nadu, on Aug 2. It has also tied up with local partners to create a charging network and for after-sales service, with plans to launch 35 dealerships by the year end in 27 cities. According to VinFast's press release, its car assembly plant in Tamil Nadu is the company's third operational facility globally. The facility, which is part of a 160 billion rupee investment pact inked between VinFast and the Tamil Nadu government in 2024 , will initially make 50,000 vehicles per year. VinFast Asia chief executive Pham Sanh Chau told NDTV news channel: 'This plant lays a solid foundation for us to make Tamil Nadu not just a manufacturing hub for India, but also VinFast's largest export base for South Asia, the Middle East and Africa.' Mr Puneet Gupta, director for India and Asean markets at S&P Global Mobility, said: 'Tesla and VinFast will both serve as catalysts in driving up EV market share in India. They are expected to attract greater attention from consumers towards electric vehicles and help increase confidence in EV technology.' Chinese automobile start-up Leapmotor's electric cars are also being launched in India, by multinational automotive manufacturing corporation Stellantis, which will assemble the vehicles. India is hoping that such assembly plants, which are at the lower end of manufacturing, will be the starting point for building a manufacturing ecosystem of EVs. While domestic EV manufacturers are keen to protect their turf, the government is encouraging foreign carmakers to come to India and make it their EV manufacturing hub in the region. Consumers with higher purchasing power are turning to EVs Sales of electric cars are inching up in India, the world's fourth-largest economy. In 2024, 99,165 electric cars were sold, which is a 20 per cent increase over the previous year, according to the Federation of Automobile Dealers Associations. EV growth in India has been led by two- and three-wheelers that accounted for a majority of the over two million EVs sold in 2024. The growth is not coming from the entry-level segment, but SUVs – where cars start at around one million rupees – and the premium segment. Consumers with more purchasing power, who own more than one car and are aware of environmental concerns, are likely leading the trend, said analysts. When Mr Surinder Gera decided to replace his 11-year-old diesel car with an electric SUV, he spent as much time convincing his 21-year-old son, with whom he runs the family clothing manufacturing business, as he did researching cars and the charging infrastructure. The family already owns a petrol car. 'He told me it's too much of a risk, as we travel a lot for our business. But I convinced him. I wanted to bring down my family's carbon footprint,' said the 47-year-old businessman, who is based in the northern Indian city of Ludhiana. In addition, Mr Gera charted every location he had visited in the last five years to see whether charging stations were present along each route. He settled on an SUV made by domestic automobile company Mahindra & Mahindra, which fell within his budget. Mahindra's electric car line-up starts at around 1.5 million rupees. Vocal for local Unlike in other parts of the world, where Chinese EV companies have been rapidly increasing their market share, domestic manufacturers dominate the market in India. China's BYD's, the world's biggest EV-maker, had a US$1 billion investment plan rejected in 2023 amid geopolitical tensions between India and China. So BYD scaled down its plans for India and relies on its assembly plant in the southern city of Chennai, which has an annual capacity of 10,000 to 15,000 units. BYD also imports many of the cars it sells in India. Things may improve for Chinese companies as China and India seek to repair ties following a 2020 clash on their border . More on this topic China's BYD plans push into India's burgeoning electric car market Tata leads with over half of the market share in the electric car segment, followed by MG Motor, which is a joint venture between India's JSW Group and China's Saic Motor. They are followed by Mahindra & Mahindra and China's BYD. Tata Motors, which once had a 70 per cent share, is finding its dominance in the Indian market challenged as more competitors come in with new car models and offer innovations like allowing buyers to lease EV batteries. In response, Tata Motors plans to have around 15 models by 2030. Mahindra & Mahindra in 2024 also announced plans to introduce seven new EVs by 2030. Long and winding road for foreign car brands Newcomers face a squeeze between the competition and aspirational buyers who want multiple features at a low price, said EY's Mr Mulgund. 'India is a very heterogeneous market. There is the rural and urban divide. Building up a dealership and service is no mean feat, and finding the right partners takes time. It can be built, but it's a longer gestation period,' he said. 'The (EV) market is not massive. Price becomes a critical part of any proposition. Indian customers are also ambitious. They want a car at the right price point but want all the bells and whistles. That is a difficult proposition to beat. You need a certain level of scale to deliver that.' Government push In order to push foreign carmakers to manufacture in India, the government in 2025 launched the Scheme to Promote Manufacturing of Electric Passenger Cars in India. Under the scheme, Customs duty is cut to 15 per cent, provided that automakers invest a minimum of 41.5 billion rupees within three years. They can then import 8,000 electric cars with a cost, insurance and freight value of US$35,000 subject to the 15 per cent tax. So far, Tesla has not shown interest, while other car manufacturers such as Mercedes-Benz, Skoda-Volkswagen, Hyundai and Kia have indicated interest, according to Mr Kumaraswamy, the minister. Volvo Car India's managing director Jyoti Malhotra told news agency Press Trust of India that, given the level of investment required, the company would do best to continue to assemble its cars in India, as it is doing, for now. As more benefits are seen, and we anticipate bigger scale, then we can evaluate others, he said. For India, going electric is an environmental imperative, given how pollution levels are climbing in its urban centres. According to the World Air Quality Report 2024 by Swiss air-quality technology company IQAir, Delhi is the most polluted capital city in the world and India is the world's fifth-most polluted country, down from No. 3 in 2023. Vehicular emissions contributed 51.5 per cent to Delhi's pollution. Delhi has banned 10-year-old diesel and 15-year-old petrol cars, and on July 1, banned even the refuelling of such cars. Ms Anumita Roychowdhury, executive director of research and advocacy at the Centre for Science and Environment, said: 'For India, electrification is not just an opportunity to clean up the environment, but it is also an industrial opportunity.' She noted that the government, apart from implementing manufacturing schemes needed to strengthen charging infrastructure, also needed to incentivise consumers more, citing measures like free parking for EVs. 'In India, you require industry to develop its manufacturing capacity adequately. You need a supply chain of critical minerals and battery manufacturing. But the supply chain will evolve only if the (automobile) industry perceives there is a demand in the market. Both have to go hand in hand.'
Mint
30-06-2025
- Business
- Mint
India looks east to this new ally to ease China's grip on EV batteries
With a globally dominant China tightening controls on exports of some critical minerals used in manufacturing of electric vehicles (EVs), Indian and Japanese companies are huddling in Delhi this week to figure a way out of the supply-chain logjam, according to two people aware of the matter. More than a dozen major Japanese players from the EV battery and critical mineral supply chain, including Panasonic, Mitsubishi Chemicals, Sumitomo Metals and Mining, Asahi Kasei and Nichia, among others, are currently in India to explore partnerships with Indian companies. All these companies are part of Japan's industry body, Battery Association of Supply Chain (BASC). From the Indian side, businesses 'like Amara Raja and Reliance are participating in discussions with the Japanese industry", one of the persons mentioned above said on condition of anonymity. The talks are expected to focus on developing a diversified supply chain for lithium-ion batteries used in EVs and energy storage systems, as well as for critical minerals like lithium and graphite, with discussions likely to explore technological collaboration and joint R&D to counter China's dominance across these markets. Mintcould not independently verify the full list of Japanese and Indian companies who will be part of discussions. Queries sent to the Japanese and Indian firms remained unanswered till press time. For Indian companies, the need to collaborate with other countries has become important as they struggle to source rare earth magnets from China, which controls 90% of their global supply and imposed restrictions on their exports this April. Alongside, several estimates peg China's global market share in lithium battery production at around 80%, while Japan is estimated to have about 10% share. Experts, though, are sceptical. Srihari Mulgund, partner at consultancy EY-Parthenon, said Indian players have to look for technology transfer and invest jointly in efforts to localise the battery technology. But partnerships with Japanese companies can only offer limited benefits, he argued. 'Collaborations with Japanese players in the EV battery and critical mineral chain offer limited scope because of the fact that China controls most of the value chain," Mulgund said. 'Mining, refining, and processing are dominated by China. Japanese players can help with battery material and technology, but their work has been more substantial on the hybrid front." In 2021, around 55 companies in Japan came together to form the BASC to strengthen the domestic industry's competitiveness in the battery supply chain. While the total number of members in the grouping isn't available, some publicly reported numbers keep it around 150 companies. Other major names include Nissan Motor Co and Toyotsu Lithium Corporation. The background Currently, Indian EV companies import more than three-fourths of their batteries from China, specifically from firms such as BYD, CATL, and EVE. Other countries that supply batteries include South Korea and Japan. While Indian companies are building their own battery factories that are likely to go live between this fiscal and FY27, they are worried about the ability to match prices of cheaper Chinese batteries as domestic players are currently fully reliant on imports of key raw material lithium. 'I think everybody would have observed that the pricing coming out of China right now is quite aggressive," Vikramadithya Gourineni, executive director for new energy business at Amara Raja Energy, told analysts in an earnings call on 30 May. 'The cell pricing, the energy storage system (ESS) pricing. So definitely, that's been on a downward trend." According to an industry executive working on EV cells, India-made batteries from domestic companies such as Amara Raja, Exide Industries, and Ola Electricare expected to be 20-30% costlier than Chinese counterparts who don't have to rely significantly on imports for sourcing key raw materials. The country's government has set a target of achieving 100GWh of lithium-ion battery capacity that can feed the surge in EV sales, which touched nearly 2 million in 2024, growing at 27% over 2023, data from Vahan portal showed. In 2021, the government announced a ₹18,100-crore production linked incentive (PLI) scheme for building battery capacity. Ola Electric, Reliance Industries and Rajesh Exports are among the firms that received a nod from the government to build the gigafactories. However, none of them has so far managed to achieve the required milestones under the scheme and are behind their schedule of commercial production. They face a possible fine from the government but the companies have cited issues with sourcing raw materials and required technology to progress at the previously stated pace. Other firms like Amara Raja, Exide Industries, and Tata Group's Agratas are also building their own lithium-ion plants. Sajjan Jindal's JSW Group, too, had previously expressed interest in making an EV battery plant.
