Hyundai and Skoda exhibit strong interest in India’s EV plan, whereas Tesla & VinFast remain silent on capital input.
The country will announce specific guidelines for the SPMEPCI in the second half of February 2025 and this will be a very important program for global and local manufacturers. It aims to clear the ground for domestic and foreign producers to invest in the burgeoning electric vehicle (EV) manufacturing space. Hyundai and Czech automaker Skoda have already shown interest in the program, while Tesla and Vietnam’s VinFast have, so far, not commented.
Government Initiative
Launched on March 15, 2024, SPMEPCI represents a pragmatic evolution in India’s broader strategy toward driving domestic production of electric vehicles (EVs). The plan is aimed to encourage companies to establish EV manufacturing plants in India and boost the country’s automotive sector in addition to promoting the green mobility initiative.
Through this scheme, the applicants will need to commit to a minimum investment amount of ₹4,150 crore (around $500 million) and a domestic value addition (DVA) of a minimum of 25% at the end of the third year and 50% at the end of the fifth year. Furthermore, the government will slash import duties on EVs priced over $35,000 from existing rates of 70% or 100% to 15%, given that manufacturers meet the investment and DVA criteria.
Interest from Hyundai and Skoda
Right now, there are only 2 automakers (Hyundai, and Skoda) that have shown interest in investing under SPMEPCI. Hyundai has set aside ₹32,000 crore for its India operations, from 2023 to 2032, which will be used towards capacity expansion, product development, and launches. The move comes as demand for electric vehicles grows in one of the largest automotive markets worldwide and the company seeks to solidify its presence in the Asian market, the company said in a statement.
Skoda recently launched its new Kylaq model in India, aiming at the popular sub-4 meter SUV segment. Klaus Zellmer, CEO of Skoda Auto, said that India was one of the company’s key markets in their global expansion effort and that 50% of new vehicle sales in India are SUVs.
Silence from Tesla and VinFast
While Hyundai and Skoda have taken proactive steps, both Tesla and VinFast have not cooperated with the government when asked to join the SPMEPCI. Tesla had in the past held talks with Indian officials about entering the market but had been reluctant citing high duties on imports and a lack of clarity on requirements for local manufacturing.
Tesla’s recent silence brings up questions about what it is going to do in India for now. Though CEO Elon Musk had expressed interest in the Indian market in the past and even met with Prime Minister Narendra Modi during the latter’s recent trip to the U.S., the company had not made a firm move to establish operations in the country.
Upcoming Guidelines
By the end of February, detailed SPMEPCI frameworks are anticipated to be released by the Indian government. These guidelines will help clarify eligibility requirements for companies seeking to apply for benefits under this program. New Jersey has stressed that it is not targeting any specific automaker but rather is seeking interest from all original equipment manufacturers (OEMs).
These guidelines, when made public, will help automakers such as Tesla formally apply for incentives from SPMEPCI. The government approach strives to enable voxel and invest effort into local manufacturing.
India is positioning itself as a key player in the global electric vehicle market, and it will be up to major automakers to respond. As the SPMEPCI opens doors for growth, investments from both Hyundai and Skoda could greatly enhance India’s EV manufacturing landscape. However, they are not ready to scoop up this growing market since Tesla and VinFast have not engaged. Hence the soon-to-be-announced guidelines will be instrumental in defining the future of EV manufacturing in India.
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