Amid fears of EV 'dumping', can India withstand the Chinese onslaught?

From all accounts, 2025 should be the year of reckoning for electric vehicle (EV) makers in India, for long upstaged by their rivals in China, the world’s undisputed manufacturing powerhouse. By February 2025, Indian EV makers had as many as 49 models on offer, the most ever, and were revving to enter the fast lane as China’s BYD (Build Your Dreams), the world’s second largest EV maker, and Vietnam’s VinFast size up the market and its potential for growth after gaining a foothold. Maruti Suzuki India Ltd. has launched the e-Vitara and Hyundai Motor India Ltd unveiled an electric version of Creta, respectively. The country’s two largest automobile makers will be competing with each other and simultaneously taking on Mahindra and Mahindra Ltd’s BE 6 and XEV 9e, JSW MG Motor India Pvt Ltd’s ZS EV and Windsor EV and Tata Motors Ltd’s Harrier EV plus Nexon EV and Punch EV. To be sure, India lags far behind China when it comes to EV manufacturing. China’s unquestioned prowess in technology and product innovation is backed by government subsidies and a well-articulated export strategy that have enabled it to steal a march over such automobile giants as Germany and Japan in their own backyards, and put in the shade even early EV adaptors like Norway and the United States. According to a report by France-based International Energy Agency, China accounted for 80% of EV sales growth, with sales jumping to four million in the first half of Calendar Year 2024 from three million in the same period of the previous year. India’s figures pale in comparison; total EV sales reached 1.9 million in CY24, making up just 6-7% of total domestic sales. Of this, electric car sales made up 99,453 units, electric two-wheelers 1.4 million, and three-wheelers 691,000 units, according to Vahan, a unit of the Ministry of Heavy Industry. In 2024 as a whole, EVs accounted for 40% of car sales in China. By the end of this year, China’s EV market share is projected to reach 50% and India’s 7-8%. China sold 11 million EVs in 2024, according to Rho Motion, a UK-based EV research firm. India focus Even so, when it comes to India, BYD and VinFast, Vietnam’s rising powerhouse, are going all in. VinFast has debuted with premium electric SUVs VF3 and VF7 and plans to launch its first locally assembled EV this year. BYD, in India since 2007, is expanding its lineup with the ATTO 3, eMAX7, SEAL, and SEALION 7, planning to import vehicles for the Indian market. It is eyeing emerging markets, expanding exports to 95 countries and planning assembly plants in 10. MG Motor, backed by China’s state-owned automaker SAIC, has formed a joint venture with Sajjan Jindal’s JSW Group. Parth Jindal, director of JSW MG Motor India, says the foreign partner is optimistic about the Indian market’s potential. “MG Motor does understand the power of the Indian market. It sees India as a huge growth avenue As China starts slowing down, and the situation in Europe remains uncertain, the real growth is coming from India,” he says. JSW MG Motor India currently operates in the mass market segment, which has become the biggest attraction for EV makers. The company is closing the EV gap with market leader Tata Motors. The company cornered a market share of 37% by selling 4,255 units in CY24. Its sales were just 782 units short of Tata Motors, which sold 5,037 units for a market share of 45%. Windsor EV by JSW MG Motor, which follows a BaaS (Battery-as-a-Service) model, has raced past the electric versions of Tata Motors’ Nexon and Punch. BaaS allows buyers a lower initial cost and pay for the battery on a pay-per-use model. Driven by subsidies Chinese EV makers, backed by lucrative government incentives, competitive pricing and low-cost manufacturing, are known for disrupting the markets they enter. Since 2014, the government reimbursed buyers to the tune of 60,000 yuan ($8,375) for every electric car they purchased. In 2023, it introduced a 520 billion yuan ($72.3 billion) tax incentive package, offering a full tax break of up to 30,000 yuan ($4,170) per vehicle in 2024-25, halving to 15,000 yuan in 2026-27. Consumers replacing conventional cars with EVs are offered a 20,000 yuan ($2,770) subsidy and EVs priced under 300,000 yuan come with a 10% subsidy until the end of this year, reducing to 5% in 2026-27. Over the past 15 years, Chinese EV makers have received $231 billion in subsidies. And unlike in other markets, in China, EVs are cheaper than gasoline-fueled cars. While EV prices have risen in Europe from €48,942 in 2015 to €55,821 in 2024, and US from $53,038 to $63,864, they have dropped in China from $66,819 to $31,829. Lower costs stem from domestic lithium-ion cell production, which reduces capital costs. Batteries alone account for 30% of an EV’s cost. China also has an extensive network of 3.2 million charging stations, addressing the range anxiety drivers harbour about batteries dying in the middle of their journey. India’s EV infrastructure is comparatively in its infancy, with just 25,202 charging stations in a country of 1.4 billion people. According to the Ministry of Heavy Industries, Rs 10,900 crore in subsidies have been allocated to promote electric two-wheelers and three-wheelers, e-ambulances, e-trucks and other vehicles, excluding electric cars, under the PM-E Drive scheme for a period of two years until March 31, 2026. Expanding the market Domestic automakers welcome the competition from BYD and other Chinese EV makers. BYD operates in the premium segment, in which cars are priced above Rs 30 lakh. The company may reconsider its earlier stance on not entering the mass market segment, according to multiple media reports. The mass market segment, in which EVs are priced between Rs 10 lakh and Rs 20 lakh, is expanding aggressively. Most domestic automakers have launched their EVs in this price segment. “Competition has come a bit late, but possibly it is also coming at a time when EV prices are also coming closer to ICE vehicle prices because of the overall cost structure reducing,” says Shailesh Chandra, Managing Director of Tata Motors Passenger Vehicles and Tata Motors Electric Mobility. ICE is short for internal combustion engine. “Competition is a good thing because it is going to expand the market,” he adds. Kia India, which plans to achieve 15-16% EV penetration by 2030, concurs. “Any new players bring their strength to the industry. Chinese are good in EVs, so I think they bring in the technology that could be good for the industry,” says Hardeep Singh Brar, Senior Vice President and head of sales and marketing at Kia India. Analysts observe that India’s EV market has vast potential. “While competition is increasing, Indian consumers will ultimately choose the most affordable and efficient option. BYD’s entry adds diversity to the market, driving innovation and enhancing consumer choices,” says Saket Mehra, Partner and Automotive Lead at Grant Thornton Bharat. Notably, except for Maruti Suzuki, most automobile manufacturers will initially focus on growing in the domestic EV market, before venturing overseas. Maruti Suzuki, which its first EV, e-Vitara, at the Bharat Mobility Global Expo in January, will focus on exports to Japan and Europe. Three Chinese companies—BYD, SAIC Motor Corp and Geely Holding Co—already have a strong presence in the European market. Maruti Suzuki is betting on Japanese quality giving it the edge. MG Motor sees India as a huge growth avenue. As China slows, and the situation in Europe remains uncertain, real growth is coming from India -PARTH JINDAL,DIRECTOR, JSW MG MOTOR INDIA “Suzuki has Japanese manufacturing. If our manufacturing quality is accepted globally, then I think we will be able to win over the competition in the export markets,” says Toshihiro Suzuki, representative director and President at Suzuki Motor Corporation. According to Mehra, the export strategy for domestic automakers should be building a competitive edge through localisation, innovation, and cost efficiency. “Rather than caution, strategic adaptation—leveraging policy support, expanding manufacturing, and strengthening supply chains—will be the key to establishing a strong global presence,” says Mehra. Elon Musk’s Tesla, the world’s largest EV manufacturer, is also eyeing India. After Musk met Prime Minister Narendra Modi on the latter’s US visit in February , the government is considering reducing import duties while mandating a target of Rs 2,500 crore in sales by the second year for global EV makers such as Tesla, media reports said. Import reliance Indian automakers, like their US and European counterparts, rely heavily on China for lithium-ion batteries. A staggering 75% of India’s lithium-ion batteries come from China. EV adoption makes economic sense for an oil-dependent India, rich in renewable energy sources and coal, but high import reliance—especially on nations with which it runs large trade deficits—poses a challenge, warned the 2024-25 Economic Survey. Competition has come a bit late, but it is also coming at a time when EV prices are closer to ICE vehicle prices because of the overall cost structure coming down -SHAILESH CHANDRA,MD, TATA MOTORS To cut dependence on China, the government has exempted customs duty on lithium-ion battery waste, cobalt scrap, lead, zinc, and 12 critical minerals, likely lowering EV costs. “Cheaper imports will boost affordability, while domestic investments in minerals, batteries, and electrolytes will drive self-reliance,” says Grant Thornton’s Mehra. Vinayak Walimbe of India Energy Storage Alliance, which promotes electric mobility, added that duty cuts on cobalt and lithium will slash raw material costs, improve profit margins, and enhance competitiveness. Even so, says Shamsher Diwan, Senior Vice President and Group Head, of Corporate Ratings at ICRA Ltd, India’s reliance on China in terms of technology and supply chain will remain high over the next five years. “I think it&#039;s almost impossible to ignore China or have it out of the equation when it comes to adopting technology on the EV battery cell side,” says Diwan. “…most of the investments which are happening in India towards manufacturing battery cells, directly or indirectly, rely on the entire value chain that currently exists in China,” he adds. Global Picture China’s dominance in the EV market is undeniable. In 2024, global EV sales surged 25% to 17.1 million, but China outpaced the world with 40% growth, hitting 11 million units. Europe’s EV market shrank by 3%, and North America’s grew by a modest 9%. Leading the charge is BYD, founded in 1995 by Wang Chuanfu, with record-breaking sales of 4.2 million new energy vehicles. Battery EV sales alone jumped 12% to 1.76 million units. Thanks to aggressive pricing and exports, BYD outperformed Honda Motor Co, whose sales fell 11.4% to 4.1 million, and Ford Motor Co., which grew just 6% to 2 million units. Sales by other Chinese automakers are also surging, up nearly 10% to 1.54 million units in CY24. China’s EV dominance has forced the US and Europe to protect domestic entities. Analysts say the geopolitical shift presents an opportunity for India to bolster its own EV industry. “For Indian automakers, these shifts present both challenges and opportunities. While increased trade barriers may disrupt global EV supply chains, they also create space for India to strengthen its domestic EV industry… Indian manufacturers must focus on localisation, cost efficiency, and policy-driven growth to remain competitive in both domestic and global markets,” says Mehra. @OrielAstha11

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Amid fears of EV 'dumping', can India withstand the Chinese onslaught?

China's subsidies and export strategy have accelerated its dominance in the EV space. Amid fears of EV 'dumping', can India withstand the Chinese onslaught?