BNP Paribas Report: India Set to Become Asia’s Next EV Powerhouse

A new report from BNP Paribas suggests that India is on the cusp of becoming Asia's next major electric vehicle (EV) hub, following in the footsteps of China’s significant impact on the global auto industry. Analyst Kumar Rakesh outlines India’s burgeoning potential and the factors contributing to its rise in the BNP Paribas India EV Report – May 2024.

India’s EV Industry Poised for Growth

The report provides an optimistic outlook on India's EV industry, noting that the country possesses the essential components to develop an internationally competitive market. The Indian government has been proactive, offering over USD 11 billion in manufacturing incentives to EV original equipment manufacturers (OEMs), suppliers, and battery cell producers. This support is complemented by a fast-growing battery infrastructure, with over 140GWh of battery cell manufacturing plants announced.

The Tesla Factor and Manufacturing Profitability

The potential entry of Tesla into the Indian market could serve as a significant catalyst for the industry. The report emphasizes that all factors necessary for developing a competitive EV sector are aligning in India. Furthermore, a comparative analysis of OEM profitability reveals that manufacturing in India is surprisingly lucrative. A case study on Apple’s shift of production to India further underscores the country’s manufacturing appeal.

Regional Comparisons and India’s Advantages

While other Asian countries like Thailand and Indonesia are also working towards establishing robust EV industries, India’s prospects are viewed as more promising. Thailand is transitioning its traditional auto industry to embrace EVs with Chinese support, and Indonesia is leveraging its nickel resources to encourage localization. However, India’s combination of scale, cost leadership, and supportive policies gives it a distinct advantage. Maruti Suzuki, in particular, stands out as a key player expected to benefit significantly from this trend, with its export potential being underappreciated.

The report concludes that India has the potential to emerge as Asia’s next EV powerhouse. With a strong industrial ecosystem, substantial government backing, and increasing domestic demand, India is well-positioned to replicate China's success in the EV sector.