According to a recent report from S&P Global Ratings, the Indian government is ramping up efforts to bolster electric vehicle (EV) production and enhance local supply chains as it aims for a remarkable 30% EV penetration by 2030.
The report stated, “We estimate that the Tata and JSW groups alone will be investing over $30 billion into making EVs and EV materials over the coming decade, of which about $10 billion will be in South and Southeast Asia (SSEA).”
With the country being the most populous in the world, India’s burgeoning market is drawing significant investment in the EV sector.
Notably, industry giants Tata and JSW are to invest over $30 billion in EV manufacturing and materials over the next decade, with around $10 billion earmarked specifically for projects in South and Southeast Asia (SSEA).
The report highlights that the successful adoption of EVs in India hinges on the launch of new vehicle models that will offer competitive pricing against traditional internal combustion engine (ICE) vehicles, alongside enhancements to charging infrastructure.
“We also believe hybrids and vehicles powered by compressed natural gas will command meaningful market share alongside EVs in the light-vehicle and passenger commercial vehicle segments,” the report added.
Meanwhile, the government has introduced the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) initiative, which has a budget allocation of Rs 10,900 crores (approximately $1.3 billion) over two years.
This program is likely to play a crucial role in accelerating EV adoption and establishing essential charging infrastructure across the nation, steering India toward a more sustainable future.
The report suggests that India’s shift away from ICE vehicles will likely prioritize alternative fuel options initially, paving the way for a gradual move to full electrification.
The report further asserted, “Government policies on imports and foreign investment will continue to play a critical role in India’s vehicle electrification.”
India is becoming increasingly vital for major automotive players such as Hyundai Motor Co and Kia, which together form the second-largest car manufacturer in the country.
In 2023, India contributed around 12% to the group’s global sales.
Hyundai is likely to strengthen its presence in the Indian market with plans to launch its first fully electric model produced locally in January 2025.
Following a recent initial public offering in India, Hyundai has announced that part of the proceeds will be reinvested to enhance its growth and product offerings in the region.
The report noted, “We believe Tata Motors has sufficient financial headroom in its credit metrics to undertake its EV investments. In September 2024, the firm announced plans to invest about $1 billion in a new EV plant in the south Indian state of Tamil Nadu.”
The parent company, Tata Sons Pte Ltd., is also developing a lithium-ion battery plant in Gujarat, which will initially have a capacity of 20 gigawatt-hours, further solidifying the EV supply chain in the area.
The report indicates that rated car manufacturers are likely to allocate over $20 billion to develop electric vehicle production capabilities in South and Southeast Asia in the coming years, underscoring a significant shift toward electrification in the automotive industry.
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