Foreign carmakers are poised to take centre stage at India’s Auto Expo as they vie for a slice of the nascent shift to electric vehicles in the world’s fourth-biggest auto market.

Returning after a two-year hiatus during the pandemic, the show, which kicks off Wednesday in New Delhi, will see China’s SAIC Motor Corp. and Warren Buffett-backed BYD Co. unveil battery-powered cars for the domestic market, while the local arm of South Korea’s Hyundai Motor Co. will hold the Indian launch of its Ioniq 5 electric sports utility vehicle. In contrast, Mahindra & Mahindra Ltd. isn’t even attending.

The prominence of foreign carmakers at India’s biggest auto show underscores the nation’s slow takeup of electric vehicles. Most local manufacturers have been reluctant to switch to EVs because of their high upfront costs, while a lack of public charging points deters buyers. Instead, the electrification push is being led by more affordable scooters and three-wheelers, which are also widely used in delivery fleets.

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India’s biggest carmaker, Maruti Suzuki India Ltd., doesn’t have any electric models in its lineup, and Chairman R.C. Bhargava says cars powered by hybrid technology, natural gas, and biofuels are a cleaner way to curb emissions in a country that generates more than 70% of its electricity from dirty coal. Mahindra, long known for its big muscle cars, offers only one electric vehicle, the e-Verito sedan — which has a range of just 181 kilometres (112 miles). That’s despite Mahindra having a first-mover advantage after purchasing Indian EV start-up Reva Electric Car Co. in 2010.

That pretty much leaves Tata Motors Ltd., which owns Jaguar Land Rover, as the dominant local player in EVs and it only has three models on offer, the Nexon EV, Tigor EV, and Tiago EV.

Also read:EV registrations hit 10-lakh mark in 2022

Shying away from Indian market

India has historically proved a barren hunting ground for other global automakers enticed by its potential size. Ford Motor Co. in 2021 said it would shut its Indian factories and take around $2 billion in charges, retreating from a market previous management saw becoming one of its three biggest. In 2020, Japan’s Toyota Motor Corp. put the brakes on expansion because of high tariffs, while Harley-Davidson Inc. and General Motors Co. have also pulled out of the country.

Electric vehicle pioneer, Tesla Inc., has shied away from the Indian market, too, with CEO Elon Musk fighting a losing battle to have import tariffs reduced before considering setting up local manufacturing plants.

Also read: BEVs and electric concepts to dominate Auto Expo 2023

Chinese companies may be a bit different, considering they have a mature supply ecosystem that allows them to source components at a low unit cost, according to Rahul Mishra, a partner at management consultancy firm, Kearney. But they’ll have to convince Indian consumers that the quality and performance of their cars is on par with international standards.

Established Korean and European brands that have full-fledged electric vehicle portfolios, meanwhile, have cost structures that are built for international markets and not designed for a price-competitive one like India. Their challenge will be locally producing cars despite small volumes and adhering to Prime Minister Narendra Modi’s Make in India push to get tax benefits, Mishra said.

The auto show, which runs until January 18 in Greater Noida on the outskirts of Delhi, is expected to attract more than 100 exhibitors and 40 automakers, according to local media.

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Hurdles

Another hurdle slowing India’s shift to EVs is a reliance on China for components, especially batteries. That means local automakers don’t have full control over the quality of parts, sparking concern about the safety of electric vehicles in India’s hot climate and potholed roads.

“While demand is there, automakers don’t have the supply chain and access to battery technology to produce electric vehicles in large volumes,” said Mishra. “They have to overcome these barriers to scale up in line with demand,” he said, adding that automakers should also invest in sales networks and after-sales.

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Local manufacturers also need to do a better job of demonstrating how electric vehicles can be used and explaining their value proposition to customers, said Mihir Sampat, a partner at Bain & Co. Automakers could build better communication elements into their sales channels or set up experience centers to alleviate consumer concerns around safety and range, he said.

Mahindra Executive Director Rajesh Jejurikar expects India to see more significant adoption of EVs in five years when customers will have more options to choose from. Rising fuel prices will also prompt drivers to switch to electric cars, he said in an email. Mahindra will electrify as much as 30% of its SUV lineup by 2027 and begin selling its XUV400 electric SUV by the end of next month.                                        

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