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Hyundai and Kia Battery Deal with Exide Energy Solutions Strengthens EV Presence in India
Hyundai Motor and Kia cemented their commitment to the Indian electric vehicle (EV) market by signing a memorandum of understanding with Exide Energy Solutions on Monday. This partnership aims to supply batteries for their EVs, marking a significant move by the carmakers to solidify their position in India.
The South Korean automotive giants disclosed their intention to localize EV battery production, focusing on lithium-iron-phosphate cells (LFP). The choice of LFP batteries over lithium-ion alternatives offers various advantages, such as cost-effectiveness, extended lifespan, and lower fire risk. However, LFP batteries do have a drawback, carrying approximately 30% less energy capacity compared to similar-sized lithium-nickel-cobalt-aluminum-oxide batteries.
By collaborating with Exide Energy Solutions, a subsidiary of Exide Industries, Hyundai and Kia anticipate pioneering the utilization of domestically-manufactured batteries. India, ranked as the world’s third-largest auto market, serves as a strategic hub for vehicle electrification, supported by the government’s commitment to carbon neutrality. Accordingly, ensuring cost competitiveness through localized battery production stands as a critical mandate in India’s EV landscape.
Hyundai Motor Group’s Strategic Investment and Expansion Plans
Parent company Hyundai Motor Group revealed plans to invest 68 trillion Korean won ($51 billion) over three years in South Korea to bolster EV production and advance its mobility business. This massive investment follows a previous commitment of 3.25 trillion won ($2.40 billion) over a decade in Tamil Nadu, known as the “Detroit of Asia.” Meanwhile, Kia is gearing up to introduce three EVs in the Indian market, including the Carens compact EV and the anticipated EV9 SUV.
During the CEO Investor Day in Seoul, Kia CEO Ho Sung Song confirmed that the EV9 is slated for entry into the Indian market this year, underscoring the brand’s dedication to regional EV offerings. In alignment with this strategy, Hyundai strives to introduce a lineup of five EV models in India by 2032, alongside existing models like the Kona and Ioniq electric SUVs, alongside expanding the charging infrastructure.
India’s Favorable EV Policy and Market Dynamics
Last month, foreign automakers, particularly Tesla, received a significant boost following India’s decision to reduce import taxes on certain imported EVs. Companies are now mandated to commit to substantial local manufacturing investments within three years to benefit from lower tax rates on luxury EV imports, witnessing a drastic decrease from 70% to 15%.
India’s Ministry of Commerce and Industry lauded this policy shift, emphasizing its role in fostering the Make in India initiative and promoting healthy competition within the EV sector. Tesla’s prolonged lobbying efforts finally paid off, aligning with Musk’s vision of democratizing electric mobility in India and facilitating the company’s market entry.
Nevertheless, challenges persist, with local manufacturers opposing changes to import duties. VinFast, a rising global player, eyes a substantial investment in India’s EV infrastructure, joining the league of foreign automakers keen on capitalizing on India’s burgeoning EV market.
Furthermore, China’s BYD and other international competitors have expressed interest in expanding their presence in India through strategic partnerships and investment initiatives. The evolving EV landscape in India underscores the country’s growing significance as a pivotal market for sustainable mobility solutions.
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