In India’s Emerging Electric Vehicle Market, Bigger Is Better

In the country, where a growing number of buyers want to own larger cars, automakers are placing their bets on inexpensive battery-powered SUVs.

Automakers are counting on inexpensive battery-powered SUVs to grab the burgeoning electric vehicle market in India, where a growing number of buyers seek to drive larger automobiles to handle the nation’s severely potholed roads and heavy traffic.

A new generation of EVs took centre stage at the country’s annual car show in New Delhi last month, with most foreign businesses trying to gain a foothold in the budding electric vehicle market. Local car executives were also enthusiastically praising the sector’s prospects, marking a notable change in tone.

Tata Motors Ltd. and Mahindra & Mahindra Ltd., two domestic automakers, are now vying for market share against Chinese goliaths BYD Co. and SAIC Motor Corp. and South Korean automaker Hyundai Motor Co. Even Maruti Suzuki India Ltd., the largest carmaker in India, which had previously generally dismissed EVs, displayed a small electric SUV it claims would be available in 2025.

In India, the demand for compact SUVs has been rapidly increasing. They are appropriate for the country’s driving conditions, which can range greatly from rutted streets congested with rickshaws, dogs, and cows to smooth multilane motorways. Additionally, they provide aspirational consumers with a significant yet inexpensive status symbol, elevating drivers above the common people. And although bigger and more expensive battery packs are needed for larger and more expensive electric SUVs, their smaller counterparts are constructed on small-car underpinnings, making them more affordable.

Andy Palmer, the former Chief executive of Aston Martin who also assisted Nissan Motor Co. in developing the Leaf, one of the initial mass-produced EVs, believes that while lighter vehicles are preferable, consumers prefer SUVs. He cited Volkswagen AG as an example, which used the ID.3 hatchback platform to also produce the ID.4 SUV. “Using a small-car architecture to build an electric SUV satisfies the sweet spot for both manufacturers and customers,” he added.

Tata Motors debuted an electric version of the Nexon small SUV in 2020 in response to the Tigor EV’s underwhelming sales. The Nexon, which costs 1.4 million rupees ($17,300) and has a driving range of around 300 kilometres (186 miles), swiftly rose to the top spot among electric vehicles sold in India.

Even Nevertheless, there has been a delayed public uptake of electric vehicles in India for passenger transportation. Due to their high upfront production costs, most local automakers have been hesitant to move to electric vehicles, and a dearth of accessible public charging stations has discouraged consumers. According to the Society of Indian Automobile Manufacturers, only 1.2% of passenger vehicles sold in the six months leading up to September were electric. Even Tata Motors, the market leader in EVs, which saw a quarter-to-quarter increase in electric sales of approximately 120%, sold just 12,596 units.

But India is also a market that automakers can’t afford to ignore, since it may already have eclipsed China as the world’s most populated country. At the same time, several international competitors are revising their approaches to China, the second sizable auto market in the globe. While Volkswagen and General Motors Co. are fighting to hold onto their positions as local Chinese manufacturers give them a run for their money, Stellantis NV, for instance, has shut down its lone Jeep production in China as a result of intervention from local officials.

India has talent pools of mostly English-speaking individuals in addition to inexpensive labour. According to Prime Minister Narendra Modi, the nation, which has the fourth-largest automobile industry in the world, will achieve net zero emissions by the year 2070.

In 2019, SAIC of China, which also owns the British brand MG, began selling SUVs in India after assuming control of GM’s manufacturing facility in the western state of Gujarat. By the end of 2024, SAIC intends to introduce three electric vehicles in India, and by then, it anticipates that the category might account for up to 30% of all domestic sales. By 2030, BYD, supported by Warren Buffett’s Berkshire Hathaway, has detailed a daring strategy to control 40% of the EV market in India. Monday marked the beginning of reservations for the eC3 electric small SUV from Stellantis brand Citroen in India.

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