Mitsui & Company and its joint venture partner from Taiwan, TECO Electric & Machinery Co. Ltd. plan to manufacture motors for electric vehicles (EVs) from next year.
In a formal note today, Mitsui announced that the two companies, through their JV, which is christened as TEMICO India, plan to build a USD 14 million production facility in Bangalore. With an annual capacity to produce 110,000 electric motors, the said unit is expected to commence manufacturing operations by end of next year.
TEMICO India was set up by Mitsui and TECO in April last year wherein the former holds 40% and the remaining 60% stake is with the latter. The official note said that the said investment is being made by the JV to pursue development, manufacturing and sales of EV motors and powertrains for global markets.
People aware of the development told Mint that this can clearly be attributed to the Modi government’s policies to promote the local manufacturing and adoption of EVs in India. Earlier this year, the government allotted incentives of ₹10,000 crore to fast-forward the localization of key EV parts under Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India, or FAME 2, scheme. Reduced tax rates on new manufacturing units, tax rebates on interest payments on loans for EVs and custom duty exemption on critical EV parts are among other key steps aimed at propelling EV localization in India.
While Japan’s Mitsui is a Tokyo-based global conglomerate with diversified interests including electric mobility and renewable energy, TECO is already known for manufacturing industrial motors and critical parts such as traction motors and controllers for electric vehicles.
Shinichiro Omachi, Managing Director, Mitsui & Co. India said, "The (new) plant (in Bangalore) creates 200 jobs and will contribute to the growth of India's EV industry, local manufacturing and reducing air pollution. Sustainability and mobility are key growth areas for Mitsui and we are investing more in EV businesses."
Earlier in July, Mitsui and Co. had invested ₹100 crore in Delhi NCR-based Treasure Vase Ventures Pvt Ltd, the parent of SmartE, India’s largest electric mobility service provider in the latter’s series B funding. Mint reported that SmartE will use the funds to expand its fleet size (electric three-wheelers) by more than 10 times and add at least five new cities thus capitalizing on the first and last mile mobility requirements.
While early EV adoption in India is seen in the two- and three-wheeler segments, a Morgan Stanley research report quotes that 2020 is expected to become the inflection point for electric two-wheelers, which are estimated to cross cumulative sales of one million units by 2022. The report suggests share of electric two-wheelers to rise to 40% of total two-wheeler market in India by 2030, thereby pointing at the opportunity size of the emerging segment.
Meanwhile, the currently disorganized electric three-wheeler segment is already seeing participation from the organized players such as Mahindra & Mahindra Ltd (M&M) and Kinetic Green Energy & Power Solutions Ltd. Major automakers such as Bajaj Auto Ltd and TVS Motor Company Ltd already have built electric three-wheeler prototypes and plan to launch these in near future.