Hyundai Motor and Kia signed a memorandum of understanding with Exide Energy Solutions on Monday to supply batteries for their electric vehicles in the latest attempt by carmakers to entrench themselves in India.
The South Korean sister companies said they aim to localize their EV battery production with a focus on lithium-iron-phosphate cells (LFP), which have a series of benefits over lithium-ion batteries. LFP batteries are cheaper to produce, have a longer lifespan, and have a lower risk of bursting into flames than alternatives. But they carry about 30% less energy than similar-sized lithium-nickel-cobalt-aluminum-oxide batteries.
The brands added that the partnership with Exide Energy Solutions, a subsidiary of Exide Industries, will position them as pioneers in using domestically produced batteries. India is the world’s third-largest auto market, behind the U.S. and China.
“India is a key market for vehicle electrification due in part to the government’s carbon neutrality goals, which makes securing cost competitiveness through localized battery production crucial,” Heui Won Yang, the head of research and development for Hyundai and Kia, said in a statement.
Hyundai Motor Group, the parent company of both Hyundai and Kia, told Reuters last month that it will invest 68 trillion Korean won ($51 billion) over three years in South Korea to boost EV production and its mobility business. Last year, the automaker said it would invest 3.25 trillion won ($2.40 billion) over a 10-year period in the Indian state of Tamil Nadu, also known as the “Detroit of Asia.”
Kia plans to launch three EVs in the Indian market, including the Carens compact EV and the EV9 SUV. At the brand’s CEO Investor Day in Seoul, Kia CEO Ho Sung Song said the EV9 will enter India this year, according to Express Drives. He added that the company will launch two region-specific EVs in emerging markets, such as India.
Hyundai aims to introduce five EV models in India by 2032 — in addition to the Kona and Ioniq electric SUVs — and add more charging stations.
EV makers hone in on India
Foreign automakers — namely Elon Musk’s Tesla — got a major boost last month after India’s federal government lowered import taxes on certain imported EVs. The government will require companies to commit to investing at least $500 million and begin domestic manufacturing within three years. That makes them eligible to import up to 8,000 EVs that cost $35,000 or more each year at a 15% tax rate, down from 70% or even 100%.
India’s Ministry of Commerce and Industry said the new policy would “boost the Make in India initiative” and “strengthen the EV ecosystem by promoting healthy competition among EV players.”
Tesla had been lobbying New Delhi for years to lower import taxes on EVs, but local manufacturers opposed any changes. Musk has frequently cited high import taxes as the main reason Tesla hasn’t done much business in the country, although he has repeatedly reaffirmed his interest.
“India is now the most populous country in the world… and it should have electric cars, just like every other country,” Musk said during an X Spaces event on Monday. “It’s a natural progression to provide Tesla EVs in India.”
VinFast, which briefly became the third-most valuable carmaker in the world last year, wants to build a $2 billion EV plant in India. The Vietnamese company has reportedly lobbied India to reduce import duties on its cars for two years.
BYD, China’s largest EV maker and rival to Tesla, proposed a joint venture with Indian firm Megha Engineering and Infrastructures last year. But it was shelved after Indian government officials raised concerns.