Electric vehicle industry of India got a huge boost with the announcement of an investment of 104.4 billion rupees ($1.37 billion) in the country by Japan’s Suzuki Motor in its factory in the country to make electric vehicles (EVs) and batteries for EVs, Maruti Suzuki India, which is majorly owned by the Japanese carmaker, said.

It is Maruti Suzuki’s first significant EV initiative for India, in an effort to connect with a government agenda to reduce oil dependence and severe air pollution in major cities.

On Saturday, Japanese Prime Minister Fumio Kishida promised $42 billion in investment in India over the next five years while visiting his Indian counterpart, Narendra Modi.

Suzuki Motor Gujarat Private would invest 31 billion rupees by 2025 to increase battery EV manufacturing capacity and 73 billion rupees to build plant car batteries, according to the company.

“Suzuki’s future mission is to achieve carbon neutrality with small cars,” said Suzuki Motor president Toshihiro Suzuki.

Maruti Suzuki, which sells one out of every two automobiles on Indian roads, plans to provide affordable electric vehicles in both Japan and India by 2025.

The Japanese automaker plans to invest roughly Rs 3,000 crore in the new factory to boost electric vehicle production in India, as well as Rs 7,300 crore in the production of electric batteries. The announcement on Sunday is the first clear promise on electrification by India’s top manufacturer, which has previously stated that the Indian market is not yet ready for electric vehicle sales.

Hyundai and Tata Motors, Maruti’s competitors, have disclosed detailed plans to electrify their vehicles. Despite the impact of the pandemic, sales of four-wheel electric vehicles increased in India in FY21.

Last fiscal year, the division sold an anticipated 5,500-6,000 units, up 60-75 percent from the previous fiscal year’s 3,400 units.

Suzuki, on the other hand, has been preparing to join the non-IC engine car market through its global partnership with Toyota, and India will play a crucial role in this strategy. Suzuki Motor Corporation (Maruti Suzuki) and Toyota Motor Corporation are their Indian subsidiaries (Toyota Kirloskar Motors).

According to sources familiar with the situation, both companies are working on a mass EV product that will be supplied to Europe and South Asian countries in addition to India.

“Investing so much money in the Indian market is not justified as there are still doubts how much the domestic market will grow for EVs. It has to be for export, too,” said a person in the know. “Suzuki’s future mission is to achieve carbon neutrality with small cars,” said Toshiri Suzuki, president of Suzuki Motor Corporation.

The new plant will be built near Suzuki’s existing Gujarat facility. Suzuki Motor Gujarat (SMG), a 100 per cent subsidiary of Suzuki Motor Corporation, owns and operates the plant, which supplies Maruti. It just began a new production line, bringing its yearly output to 750,000 pieces.

Suzuki has previously constructed a Lithium-Ion battery pack production factory at Hansalpur, Gujarat, in collaboration with Japanese businesses Denso Corp and Toshiba. Manufacturing is expected to begin this year. Lithium cells are the core of an electric vehicle, and most EV manufacturers now source their batteries and cells from China, which is the world’s largest supplier of Li-ion cells.

Because a big portion of the manufacturing is done in India, the industry expects Maruti to be able to sell an electric car at a lower cost than its competitors. In New Delhi, the most popular electric vehicle, the Tata Nexon, starts at Rs 14.5 lakh.

Suzuki plans to spend 2.2 trillion yen on research and development and capital expansion between 2021 and 2025. Around 1 trillion yen will be spent on R&D, the majority of which will go toward the development of electric vehicles.

(Adapted from Business-Standard.com)

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