BYD India eyes booming EV market but faces investment hurdles due to regulatory restrictions and geopolitical tensions since 2020.
Chinese carmaker BYD wanted to get a piece of the quickly emerging EV market in India but it is trapped in unclear investment regulations. Currently the company has a long term strategy to invest up to $1 billion in India if it finds the right kind of policies from the Indian government. Nevertheless, with the 2020 border skirmish between India and China, the restrictions applied to Chinese companies have slowed this process. Despite presenting it as a venture with a local partner, BYD has not secured the necessary permissions similar to the Great Wall Motor’s case.
Strategic Expansion Plans of BYD
But BYD is unperturbed and considers India a very important market for its international operations. The company has so far spent $200 million to source premium models like the new Atto 3 SUV for the APMG luxury segment that comprises vehicles with prices ranging from $24,000 to $60,000. Similar to other Chinese carmakers, BYD’s approach is to ensure it sells cars with the target market being the rich consumers with imported high-end electric cars as they wait for the appropriate local manufacturing laws to be passed. It is effective for BYD to enter the Indian market in this way while waiting for its expansion in the future.
India’s Emerging EV Market
India currently accounts for 2% of the total EV sales, but this is estimated to increase to 30% in the next ten years which indicates new entrants that will have a lot of potential. All-electric cars have already been launched by BYD Company and they want to also move into the up-market segment as seen with models such as eMax 7 which cost between $32,000 – $35,500 with a range of 420- 530 KM. Thus, with increasing market size, BYD may again carve out its new market and target clients with higher buying potential.
Political Business Risks and Uncertainty of Investment
Over the last couple of decades, there has been rising animosity between China and India that makes cross-border investments challenging, as was the case with BYD. More precise rules are needed for the further development of investments worldwide and getting benefits for both parties in the EV industry. BYD’s experience indicates that governments need to provide proper guidelines that would encourage businesses to foster economic cooperation.
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