India plans to develop electric vehicle market
2024-08-07
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In recent years, the Indian electric vehicle market has shown a rapid growth trend. According to data released by the Federation of Indian Automobile Dealers Associations, India's electric vehicle sales will be about 90,000 units in fiscal year 2023-2024 (April 1, 2023 to March 31, 2024), nearly doubling from the previous fiscal year. In addition, data from research firm Counterpoint Research shows that India's electric vehicle sales will almost double in 2023 and are expected to grow by 66% in 2024, reaching 4% of total passenger car sales. By 2030, electric vehicles in India are expected to account for nearly one-third of the Indian market.
India's vigorous development of the electric vehicle market is driven by the trend of the international environment and is closely related to its domestic energy situation. India lacks oil resources. If traditional fuel vehicles are used nationwide, a large amount of oil will need to be imported every year, which puts certain pressure on the country's foreign exchange reserves. The development of electric vehicles will help the Indian government to reduce oil imports and thus control the speed of foreign exchange outflows. To this end, the Indian government has introduced a number of measures to improve the local electric vehicle production capacity and urgently attract new energy vehicle companies to invest and set up factories in India. On the one hand, India has significantly increased tariffs on the import of new energy vehicles and the assembly of imported parts. At present, India imposes a high tariff of 70% on imported cars below US$40,000 and a tax of up to 100% on cars above US$40,000; on the other hand, India has significantly reduced the tax rate for the production and manufacturing of new energy vehicles in the country. At present, as long as companies promise to invest at least 41.5 billion rupees (about 3.6 billion yuan) and start producing electric vehicles in local factories within 3 years, they can get tax incentives.
Driven by such measures, local Indian automakers have vigorously explored the potential for electric vehicle development, and multinational companies have also begun planning to build factories in India. As for local automakers, Tata, India's largest integrated automobile company, has always been a leader in the electric vehicle passenger car market, accounting for about 70% of the market share. In January this year, the company opened a pure electric vehicle showroom near New Delhi, preparing to further tap into market demand. Another Indian automaker, Maruti Suzuki, is also stepping up the construction of factories to launch electric vehicles in fiscal 2024. As for foreign companies, many new entrants have already begun practical actions. For example, Vietnamese electric vehicle manufacturer VinFast officially broke ground on its integrated electric vehicle factory in Tamil Nadu, southern India, and South Korea's Hyundai Motor announced that it will invest 200 billion rupees (about 17.3 billion yuan) in Tamil Nadu, India within 10 years.
But at the same time, India's pace of attracting foreign investment to promote the development of its local electric vehicle industry is still hindered. In April, Tesla said it planned to explore building an electric vehicle factory in India and announced that it would invest $3 billion, but the news of Tesla's entry into India has gradually decreased. There are many reasons for the change in attitude of Tesla and other European and American companies. Relevant experts believe that India still has many immature factors in the development of electric vehicles, and this market will take a long time to grow. It is not surprising that multinational companies think twice before acting.
First, it is difficult to implement core technologies. The main challenge facing battery manufacturing in India is the heavy reliance on imports of raw materials for batteries. According to Indian media reports, India lacks both large reserves of key minerals such as lithium, cobalt and nickel that are essential for battery production and corresponding mining and reserve experience. This situation makes it difficult for India to meet the large demand for minerals required for the development of the electric vehicle industry in a short period of time.
Secondly, the basic supporting facilities are not yet complete. There is still a lack of charging piles in India's major cities, and the central and local governments have not yet invested in laying charging piles, which makes it inevitable that consumers have doubts about the vehicle's range, and it is difficult to increase consumption willingness, and car companies naturally have a wait-and-see attitude. In addition, the gap in the industrial chain and technical personnel is also quite serious. At this stage, the Indian motor vehicle market is still dominated by fuel motorcycles, and there is no complete electric vehicle industry chain and supply chain. In the battery industry, there is a shortage of technical personnel and management personnel.
Finally, it is expensive to buy an electric car. For Indian consumers, it is usually cheaper to buy a traditional fuel car than an electric car. Indian consumers are price-sensitive. Compared with expensive electric cars, they will choose cheaper and more fuel-efficient small fuel cars from Japan and South Korea. In addition, due to the short time and limited publicity of the government, many target consumers are still not fully aware of the benefits and operation of electric cars, resulting in their lack of willingness to buy electric cars.
As an emerging industry in recent years, new energy vehicles have been regarded by many countries as a major trend of future development. At the same time, new energy vehicles have very high requirements for high-tech supporting facilities. Various countries and regions, including leading car companies, have spent a lot of time and energy on the research and development of related technologies and market expansion. Therefore, if the Indian electric vehicle industry wants to catch up with the pace of global industrial development, it still has a long way to go. (Economic Daily reporter Shi Puhao)
