A file photo of a Mahindra Reva plant. India’s largest EV maker Mahindra has committed over  ₹1,000 crore to build manufacturing lines for EVs and powertrains in Maharashtra and Karnataka.
A file photo of a Mahindra Reva plant. India’s largest EV maker Mahindra has committed over 1,000 crore to build manufacturing lines for EVs and powertrains in Maharashtra and Karnataka.

Auto firms take cue from govt, gear up for future beyond petrol, diesel

  • Automakers move to tap emerging market on govt push to turn India into an EV manufacturing hub
  • Hyundai plans to set up a lithium-ion battery plant for its affordable EVs for the Indian market

Automobile and other companies in India are following through on the government’s push to turn the country into a global manufacturing hub for electric vehicles by announcing plans to tap this emerging market.

With the government revealing serious intent for the EV segment with a host of incentives in the budget, automakers are gearing up to prepare for a future beyond petrol and diesel vehicles.

Hyundai Motor Co., India’s second-largest carmaker, plans to set up a lithium-ion battery manufacturing plant for its affordable electric vehicles designed for the Indian market. Hyundai’s sourcing department is in talks with vendors to create a separate supply chain for such vehicles.

Salt-to-software conglomerate Tata group through its companies such as Tata Motors Ltd, Tata Power Ltd and Tata Chemicals Ltd is investing in various aspects of electric mobility. Last week, Tata Chemicals was allotted land to build a lithium-ion cell manufacturing plant in Dholera in Gujarat by the state government.

New entrant MG Motor India Ltd would introduce an electric sport-utility vehicle as its second product in the domestic market by the end of December. The unit of China’s SAIC Motor Corp. will be assembling the eZS SUV in India. Meanwhile, SAIC recently tied up with Finland-based clean energy major Fortum to install 50-kilowatt fast-charging stations in five cities in India.

Naveen Munjal-led electric scooter maker Hero Electric will expand its manufacturing capacity five-fold to 500,000 units a year to meet a potential rise in demand for electric vehicles.

Finance minister Nirmala Sitharaman announced in the 2019 budget income tax rebates of up to 1.5 lakh to customers on interest paid on loans to buy electric vehicles, with a total exemption benefit of 2.5 lakh over the entire loan period. Some companies such as Hyundai and MG Motor are looking at electric mobility as an evolving space which can help them either get a headstart over rivals.

Sitharaman also announced a customs duty exemption on lithium-ion cells, which will help lower the cost of lithium-ion batteries as they are not produced in India. Makers of components such as solar electric charging infrastructure and lithium storage batteries can avail investment-linked income tax exemptions and other indirect tax benefits.

Seon Seob Kim, managing director and chief executive, Hyundai Motor India, said in an interview earlier in July that the company won’t be able to achieve cost competitiveness in mass-market electric vehicles without localizing major components.

“Our procurement division is now at a very early stage of finding out right partners to set up an electric vehicle ecosystem. It will be a different set of suppliers compared to the internal combustion engines," Kim said. “Right now, our teams are trying to contact them and understand them and maybe work together to increase their capabilities and also improve the level of technology (for the particular parts). So, that is quite a priority item".

Companies under the Tata group are working on various aspects of electric mobility. For instance, Tata Power is working on charging infrastructure for electric vehicles while Tata Chemicals plans to build a lithium-ion cell manufacturing plant in Gujarat.

Tata Motors is working closely with its Jaguar Land Rover unit to design electric vehicles.

Shailesh Chandra, president, electric mobility business and corporate strategy, Tata Motors said the intent of teaming up with the group companies is to bank upon the specific individual strengths without losing focus on the core domain, ensure faster time-to-market for the new generation electric vehicles and build an ecosystem, which can support wider technology adoption in the domestic market.

“We realized that EV adoption is not about just designing, producing and selling the products. It is about the whole ecosystem. Without that, we can make products but there will be no buyers for them. That’s when we realized that this is where we need partners so that we focus on the areas that are core to us in future," Chandra said in an interview on 12 July.

India’s largest electric vehicle maker Mahindra and Mahindra has committed more than 1,000 crore to build manufacturing lines for electric vehicles and powertrains—to be supplied to other OEMs—in Maharashtra and Karnataka.