South Korean automaker Hyundai Motor Co has announced plans to invest $2.45 billion in the Indian state of Tamil Nadu over the next decade to expand electric vehicle production in the world’s most populous country. The move is part of Hyundai’s efforts to grow its footprint in the fast-growing Indian auto market.
The investment will also see Hyundai set up a battery pack assembly unit with an annual capacity of 178,000 units, and install 100 EV charging stations across Tamil Nadu in the next five years. Furthermore, the company plans to increase the production volume at its factory near Chennai to 850,000 vehicles per year, up from roughly 775,000 currently.
Hyundai’s investment in Tamil Nadu is timely, as India’s federal government recently announced that it would raise taxes on imported vehicles to encourage local manufacturing. In response, the automaker is developing a local vendor base for EV parts, as the government’s production incentive scheme is applicable only when manufacturing is done within the country.
India’s EV industry is rapidly growing with a slew of launches by domestic carmakers such as Tata Motors and Mahindra & Mahindra, as well as global rivals like Nissan Motor and Renault SA. Hyundai is lining up five new EV launches in the third largest car market in the world, with the aim of capturing a 20% share by 2032.
Despite India’s rapidly growing EV market, it still only accounts for a small fraction of the country’s total car sales, at barely 1% in 2022. However, the federal government aims to push that share to 30% by 2030, creating ample opportunity for Hyundai to increase its presence in India.
Hyundai is already a major player in India’s passenger vehicle market, holding about 15% share and only behind top carmaker Maruti Suzuki India, the local unit of Japan’s Suzuki Motor. The company expects its export volumes to hit 319,000 vehicles by 2032, up from 181,000 in 2022.
Overall, Hyundai’s investment in Tamil Nadu is a strategic move that will help the company expand its EV production capacity and tap into India’s fast-growing auto market. The move will also help Hyundai comply with the Indian government’s push for local manufacturing, while boosting its competitiveness in a market that is expected to grow rapidly in the coming years.