Automakers to Pump $10 Billion in Building EV Capacity by 2030
Automakers to Pump $10 Billion in Building EV Capacity by 2030According to ETIG data, automakers in India will invest nearly $10 billion (80,000 crores) to build infrastructure for manufacturing electric vehicles by the end of this decade.
The move coincides with the electrification trend that is sweeping the global automotive industry. It is also prompted by the government’s push to replace pure internal combustion engines with battery-powered vehicles.
The capital expenditure would include the construction of two greenfield EV plants, investment in battery plants to manufacture batteries from the cell level and support grid charging infrastructure.
While carmakers’ preliminary plans show that they intend to build around 2 million EVs, bringing the cumulative installed capacity to around 7.2-7.5 million units by 2030, two-wheeler manufacturers are planning to build 15.5 million EVs, which would be equivalent to nearly two-thirds of the cumulative installed capacity of ICE-powered two-wheelers.
“This is the first time in a decade that one will be seeing this kind of capex in the creation of fresh capacity,” said Puneet Gupta, director of S&P Global Mobility. However, owing to the volatility in the battery technology manufacturers are unlikely to commit large capex in one go, he added.
If more automakers plan to build battery plants to increase backward integration, the capex is likely to be revised upwards. “This investment will be the first critical milestone if India has to become a $5 trillion economy. As of now, the government and the industry are in sync with each other,” Vinod Aggarwal, president of the Society of Indian Automobile Manufacturers Association, said.
With incumbents increasing capacity and multiple carmakers set to enter the fray in 2025, India’s EV penetration for passenger cars is expected to reach 25-30% by 2030. Better battery density is expected to reduce range anxiety and lead to greater adoption of battery-powered vehicles.
CLSA estimates that e-car sales will be around 1.54 million units in 2030, up from 47,241 units in FY23. It expects e-two-wheeler retail sales to grow at a 9% CAGR between FY22-31 and 8% between FY22-36.
Maruti, which is leading the capex charge among carmakers, plans to increase its installed capacity to around four million units by 2031, up from 2.25 million now, as it launches six EV vehicles
It is expected to invest 45,000 crores in doubling capacity.
The company’s first EV model will go on sale in 2025, and subsequent models will be released at regular intervals.
Mahindra and Tata Motors have announced EV capital expenditures of 10,000 crores and 15,000 crores, respectively, to be incurred over the next 5-7 years. Hyundai has recently committed to spending $2.45 billion (20,000 crores) in the southern Indian state of Tamil Nadu over the next ten years to expand its plans for electric vehicles in the country. The carmaker’s Chennai factory currently has a capacity of 775,000 vehicles per year, which it plans to increase to 850,000. The organization has
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