New Delhi: Hyundai Motor Co. is developing affordable electric vehicles for the Indian market, a senior company executive said, as the South Korean automaker plots to get a head start over its rivals in this nascent but potential growth market.

To push forward its plans, Hyundai is in talks with vendors in India to develop a parallel ecosystem for electric vehicles (EVs) in India, Seon Seob Kim, managing director and chief executive of Hyundai Motor India, said in an interview. Its current ecosystem, including the vendor base for traditional internal combustion engine vehicles, is based in Chennai.

The affordable electric vehicles project, underway in South Korea, is to develop the Smart EV platform that will spawn a range of vehicles for emerging markets like India.

Hyundai on Tuesday became the first company in India to introduce a long-range battery in its Kona sport utility vehicle (SUV), priced at 25.30 lakh. The Kona will soon face competition from MG Motor India, a unit of China’s SAIC Motor Corp., which is slated to offer its eZS electric SUV by the end of December.

The engine block of Kona electric compact sports utility vehicle (SUV) is displayed during the vehicle's launch at the Buddh International Circuit in Greater Noida (Photo: Bloomberg)
The engine block of Kona electric compact sports utility vehicle (SUV) is displayed during the vehicle's launch at the Buddh International Circuit in Greater Noida (Photo: Bloomberg)

So far, Mahindra and Mahindra Ltd has been the sole mass-market EV maker in India, though with limited volumes. Tata Motors Ltd has recently launched the EV version of its Tigor compact sedan that is aimed at commercial users. Maruti Suzuki India Ltd is expected to unveil the electric Wagon R, its first EV, in 2020.

“After launching the Kona EV, we are studying various options," Kim said. “Our initial study suggests that instead of introducing more global products, we should have an India-specific EV platform and that will be mass market. So, we are working on development of those vehicles now. It is at a very early stage. If we come up with a great solution to the industry and market, we can expect huge volumes with mass-market EVs as well."

Kim did not elaborate.

An electric charging point is shown on a Hyundai Motor Co. Kona electric compact sports utility vehicle (SUV) during the vehicle's launch at the Buddh International Circuit in Greater Noida (Photo: Bloomberg)
An electric charging point is shown on a Hyundai Motor Co. Kona electric compact sports utility vehicle (SUV) during the vehicle's launch at the Buddh International Circuit in Greater Noida (Photo: Bloomberg)

Hyundai’s plans follow the Union government’s nudge to automakers to produce eco-friendly vehicles and its move to unveil incentives in this year’s budget to accelerate the adoption of such vehicles.

In her maiden budget, finance minister Nirmala Sitharaman announced income tax rebates of up to 1.5 lakh to EV buyers on interest paid on loans to buy electric vehicles, with a total exemption benefit of 2.5 lakh over the entire loan period. The minister also announced customs duty exemption on lithium-ion cells to lower the cost of lithium-ion batteries in India as they are not produced locally. Makers of components such as solar electric charging infrastructure and lithium storage batteries will be offered investment-linked income tax exemptions.

Kim said producing mass market vehicles at affordable prices would be unviable without localization of major parts and components. The Kona, which Hyundai claims can run up to 452km on a single charge, is assembled from parts imported from South Korea.

Also watch: Meet Hyundai Kona Electric, ‘India’s first fully electric SUV’

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

He said the mass market EVs would be designed first for retail buyers and later supplied to ride-hailing platforms such as Ola and Uber.

The Kona will be initially sold by 14 dealers in 11 cities. Hyundai has tied up with Indian Oil Corp. Ltd to open charging stations with fast chargers at select fuel stations in Mumbai, Delhi, Chennai and Bengaluru.

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