Eye on the green future, auto companies line up over Rs 2 trillion

With an eye on volumes as well as investing in future technologies, leading passenger-vehicle (PV) makers in the country have lined up investments of over Rs 2 trillion over the next few years.

Giants like Tata Motors, Mahindra and Mahindra (M&M), Maruti Suzuki India Ltd (MSIL), Hyundai Motor India Ltd (HMIL), JSW MG Motor India, Nissan Motor Corporation, and Renault SA have indicated big-ticket investment for creating capacities, product development, and a commitment to cleaner environment-friendly technologies.

Last week Tata Motors, the country’s market leader in electric vehicles (EVs), said it was planning to spend Rs 16,000-18,000 crore as capital expenditure on its EV arm till FY30. The company, which sells four electric car models, aims to launch six more by March 2026.

The investment announcement comes when the auto major is targeting a 20 per cent share in the PV market by FY30 and expects EVs to contribute 30 per cent of its portfolio by then.

India is the third-largest PV market where sport utility vehicles (SUVs) constitute nearly half of it. Moreover, 20-21 per cent of this market, which is estimated to touch six million by FY30 (from 4.3 million in FY24), is expected to comprise EVs.

Tata Motors has said its product portfolio represents 53 per cent of the industry volumes. It aims to increase this to 80 per cent with new nameplates and will try to deliver over a 25 per cent market share across its addressable market.

The last three years have seen the highest ever sales for Tata Motors.

As this battle for market share takes centre stage, most players are trying to create capacity.

Korean auto major HMIL, which is set to launch an initial public offering in India, has lined up investments of Rs 32,000 crore over the next 10 years. It plans to put in Rs 6,000 crore in the newly acquired plant from General Motors in Talegaon. It will also invest Rs 26,000 crore in Tamil Nadu to expand production, and develop a components ecosystem, EV manufacturing, charging infrastructure, and skill development over the next 10 years.

HMIL sold 614,717 passenger vehicles in India during FY24, achieving an 8.3 per cent year-on-year growth rate.

Most of these announcements come on the heels of the auto giants pivoting towards EVs.

MSIL had announced in 2023 the launch of its first EV in the SUV category in 2023-24. However, the launch date was pushed back to 2024-25. It aims to introduce six EVs in India by 2029-30.

MSIL is trying to reclaim its 50 per cent market share by the middle of the decade and has announced a plan to invest Rs 10,000 crore in capacity creation, new model development, etc for 2024-25, up from Rs 6,800 crore in 2023-24.

Much of this capex is going into readying the first production line at Kharkhoda, Haryana, which is expected to start production by 2025 and will add 250,000 units annually.

MSIL at present produces 2.35 million units a year at its plants in Gurgaon, Manesar, and Hansalpur (Gujarat). This includes the Suzuki Motor Gujarat contract manufacturing facility, which MSIL recently took over.

The upcoming Karkhoda plant will add a capacity of another 250,000 units annually.

MSIL has outlined a Rs 1.25 trillion capex till 2030-31 to expand capacity up to 4 million units per annum and also increase its product range to 28 models.

About Rs 45,000 crore would be used to create a capacity of two million units.

In a recent investor presentation, MSIL had said it expected EVs to comprise 15-20 per cent of its cars in 2030-31. Another 25 per cent could be hybrids and the rest would use ethanol, compressed natural gas and possibly compressed biogas.

Similarly, the M&M board last month had approved investing Rs 12,000 crore in its EV arm Mahindra Electric Automobile (MEAL) to fund the EV journey over the next three years.

M&M will roll out its first set of “born EVs” in the first quarter of calendar year 2025. A “born EV” is an electric vehicle designed and engineered from the outset as an EV, without being built out of an internal combustion engine (ICE) vehicle platform.

EVs will constitute 20-30 per cent of M&M’s sales by around 2027 or so.

Anish Shah, managing director and chief executive officer, M&M, had last month said EVs would have a similar margin profile (on a per unit basis) as ICE vehicles. Just like ICE vehicles, EVs would have a lower margin profile when newly launched, and thereafter improve the margins through value engineering.

M&M, which is readying to launch nine sport utility vehicles (ICE), seven born electric vehicles (BEVs), and seven light commercial vehicles by 2030, has outlined an investment of Rs 27,000 crore in its auto business between 2024-25 and 2026-27.

Of these ICE vehicles will get around Rs 8,500 crore.

In March, Chinese automotive giant SAIC Motor, which owns MG Motor India, and diversified business conglomerate JSW Group joined forces to form an automotive joint venture — JSW MG Motor India Pvt Ltd.

In this partnership, JSW holds a 35 per cent stake. The JV plans to invest approximately Rs 5,000 crore to develop new-energy vehicles (NEVs) and ICE vehicles for both the Indian market and exports.

MG Motor is currently the number two player in the Indian electric car market.

South Korean carmaker Kia India in 2025 plans to launch a ground-up EV, specifically designed for the Indian mass market, marking the brand's first foray into the mainstream electric segment.

Last year Nissan and Renault had announced a Rs 5,300 crore investment in India to develop six products both for the domestic and foreign markets. These new models include two EVs. The Renault-Nissan alliance Oragadam plant will be spruced up for this.

Meanwhile, component makers are expected to invest more than Rs 25,000 crore over three-four years mainly to develop components for EVs.

Ratings agency ICRA said 45-50 per cent of this would be in battery cells, which are now imported.

Their investment also includes manufacturing  two-wheeler components. 

(With inputs from Deepak Patel and Shine Jacob)