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"I have been to India many times and ended up Close all my business." As the first batch of new car-building forces to "go to sea", Xiaopeng cars have waded through many pits. At the beginning of 2021, he Xiaopeng advised automobile practitioners to "cherish life and stay away from India" with his experience in India.

However, India is too attractive. In China, Europe, the United States and even India, there is no lack of views that India is similar to China in the past, all kinds of industries are a blue sea, should be laid out as soon as possible, seize the first opportunity, especially new energy vehicles.

According to the latest figures released by the Association of Indian Automobile Manufacturers, India sold 4.725 million new cars in 2022, surpassing Japan for the first time to become the third place in the world, after China and the United States.

Of course, the sales of new cars in India and China (26.864 million) are not of the same order of magnitude, and the sales of new energy vehicles in China are more than 180 times that of India, but the population size of the two countries is about the same, so outsiders think that the potential of the Indian market can be imagined.

BYD, the world's top seller of new energy vehicles, does not believe it will repeat the mistakes of Xiaopeng Motor. In mid-January, BYD India said it would occupy 40% of India's new energy vehicle market by 2030, meaning it was at least second in the Indian market.

As early as in the era of fuel cars, SAIC, BAIC Foton, Great Wall, Chang'an, Jianghuai and other Chinese car companies have shown their ambitions to enter India, but so far they do not dare to win, even with difficulties.

In contrast to the smartphone industry, Canalys data show that except Samsung, which ranks second in the Indian smartphone market, the other four seats in the Indian smartphone market have been won by Chinese brands (Xiaomi, VIVO, OPPO and realme), accounting for 66 per cent of the Indian smartphone market.

Chinese brands have dominated the Indian smartphone market for many years. Can China's new energy vehicles replicate the achievements of mobile phones?

1. Indian cars, the history of the Indian automobile industry can be traced back to before World War II, when General Motors and Ford of the United States set up car assembly plants in India to assemble parts. However, the two auto giants were eventually defeated by Japanese and local car companies, and successively withdrew from the Indian market.

The 1940s was the infancy of India's national automobile industry, when Tata, one of the largest automobile groups in India, was born.

After India declared its independence in 1947, for a long time, it adopted a series of policies aimed at protecting the local automobile industry, such as implementing a strict "approval system" for private enterprises, restricting car imports with a "quota system" and high tariff policies, and then forbidding foreign companies from assembling cars in India.

Under various restrictions, the development of India's automobile industry is slow. Until the 1980s, when India opened the opening of "liberalization", Japan's Suzuki took the opportunity to set up a joint venture with the Indian government, that is, Maruti Suzuki, the "top seller" of the Indian auto market today.

In the early 1990s, when India implemented economic reforms, a large number of foreign car companies began to pour into India. As a result, Indian friends were unhappy again. A series of policies demanding higher localization rates were strongly opposed by Europe, the United States and Japan, and a lawsuit was filed against WTO. Finally, India abolished the relevant policies at the beginning of this century.

So far, India's automobile industry policy has been "repeatedly jumping" in expanding the scope of opening up and tightening restrictions, which makes many foreign car companies, including Chinese brands, feel helpless. When it comes to new energy vehicles, India seems to be caught in a dilemma of unclear goals, radical and cautious.

In March 2002, the Ministry of heavy Industry and SASAC announced the "Automobile Policy", one of which mentioned "supporting the development of alternative energy vehicles", but did not formulate a detailed development plan.

It wasn't until 2011 that the Indian government remembered new energy vehicles, when there was a plan in the budget that encouraged the development, manufacture and consumption of hybrid and electric vehicles that had never existed before. The then Indian Finance Minister said that the elimination of basic import duties and countervailing duties on such products would play a positive role in promoting electric vehicles.

India really takes new energy vehicles seriously, starting from the National Electric vehicle Action Plan 2020 published in 2013, which sets a target to achieve 60 million electric vehicles on the road by 2020. to help India become the world leader in the new energy vehicle market by 2020.

It should be noted that the statistical caliber of electric vehicles in India includes two-wheeled and three-wheeled vehicles, and if only electric vehicles are included, the target is about 2 million. China, which earlier decided to develop new energy vehicles, sold 1.366 million vehicles in 2020, which shows how beautiful the "Indian Dream" is.

As part of the National Electric vehicle Action Plan 2020, the Indian government implemented two stages of the Rapid Popularization and production of New Energy vehicles in 2015 and 2019, including consumption subsidies and infrastructure construction incentives.

During this period, India also "painted big cakes" and "made an own dragon".

In 2017, it was proposed to achieve 100% electrification by 2030, and it would be reduced to 30% in 2019 the next year. First there was news that there was a plan to ban the sale of fuel cars in 2030, which was then denied by Indian government officials. There was no timetable and there was no schedule for full electrification.

In 2019, NITI Aayog, an Indian government think-tank, released a report on the reform of electric vehicles in India, targeting the sales penetration of electric vehicles in India in 2030 at 70 per cent of commercial vehicles, 30 per cent of private cars, 40 per cent of buses and 80 per cent of two-wheeled and tricycles.

Since then, India has continued to introduce policies to promote the "acceleration" of new energy vehicles. In February 2022, the Indian government plans to invest 260 billion rupees to subsidize car companies over the next five years, aiming to make India the world's manufacturing center for new energy vehicles.

Generally speaking, India is becoming more determined to develop new energy vehicles, but it should be more stable in terms of ambition. After all, the penetration rate of new energy vehicles in India is less than 1%.

2. The past events of Chinese car companies in India since the economic liberalization reform in the 1990s and the release of the "Automobile Policy" at the beginning of this century, foreign cars have been driven into India one after another. with the increase of the strength of Chinese local car companies, going out to sea is gradually put on the agenda, and the South Asian continent naturally cannot ignore it.

Before Chinese car companies went to India, they were attacked by Indian car companies first. As early as 2004, India's Tata Group signed a memorandum of understanding with brilliance in an attempt to introduce Tata Motors to China, but the plan failed.

According to past public data, about before 2010, Chinese car companies such as BYD, SAIC, BAIC Foton, Great Wall, Chang'an, Chery, Jianghuai, and Haima began to go southward more intensively, or tried to investigate, or began to lay out, which attracted the attention of the Indian market at that time, among which BYD, SAIC, BAIC Foton and Great Wall were the bigger ones, but later their fates were different.

BAIC Foton and Great Wall are an unlucky couple.

In 2010, BAIC Foton considered exploring the Indian market and signed a contract with the Indian state of Maharashtra the following year, with a plan to invest 2.4 billion yuan to build a plant with an annual production capacity of 100000 cars. However, due to geography and other reasons, the project is not going well.

In 2017, that is, the year when India was more aggressive in the development of new energy vehicles, Fukuda cooperated with PMI of India on pure electric buses, and finally landed the cooperation project in 2019. The joint venture company of the two sides acts as the general agent for the import of new energy buses in India to import, produce and sell Futian products.

In 2020, Indian authorities suspended some Chinese projects, including Fukuda and another Chinese carmaker, Great Wall Motor, because of border problems between the two countries.

The layout of the Great Wall is relatively late in India, and it took more than 5 years to study it. Great Wall opened its R & D center in Bangalore in 2016, established a subsidiary in India in 2019, officially announced its move into India in 2020, established a full-service ecological chain covering research, production, supply and marketing, and acquired a GM plant in India.

In July 2022, Great Wall negotiated with GM to terminate the acquisition, but Great Wall said the R & D center continued to operate.

The Chinese car companies that are currently doing well in India, including SAIC and BYD, entered India earlier.

In November 2009, SAIC discussed with GM to introduce Wuling small cars into GM's plants in India for production and sales in India. The core point of the discussion between the two sides is whether the plan is feasible.

It is absolutely feasible in terms of products, because the best-selling models in India are low-cost small cars, such as Suzuki's Otto. However, SAIC worked for three years and lost money for three years. In 2012, SAIC naturally gave up its investment and sold its stake in the joint venture to GM.

GM has also been having a bad time in India, where SAIC acquired a GM plant on the eve of announcing its withdrawal in 2017. Two years later, Shangqi's famous lord went on sale in India.

SAIC Mingjue was the only Chinese brand to squeeze into top10 in India in 2022, but with a share of less than 2 per cent. This year, SAIC is expected to win at least 25 per cent of India's electric car market.

BYD moved faster in India, setting up factories and branches there in 2007. Unlike SAIC, BYD plays B first and then C, taking commercial vehicles as a breakthrough, and then mapping the Indian passenger car market.

The first BYD electric bus landed in India in August 2013 until October 2022, nine years later, BYD launched a high-end pure electric SUV yuan Plus in India, officially announcing its entry into the Indian passenger car market and planning to build a second factory. Earlier, BYD delivered a batch of e6 in India, but mainly for the ride-hailing market.

By October 2022, BYD had set up 24 dealer showrooms in 21 Indian cities, and plans to have 53 by 2023.

BYD India said it planned to sell NT $15,000 of Plus in India this year, and if achieved, its market share could be higher than SAIC expected.

3. India's new energy is not in a good position. as mentioned earlier, compared with China, India's car sales do not match the size of the population, especially the Indian new energy vehicle market. It is not even too much to regard as a blank. After all, the market penetration rate in 2022 is less than 1%, which is about the level of China in 2013.

After years of high growth, China's new energy vehicle market has a market penetration of more than 25% in 2022, which will undoubtedly be higher in the future, but sales growth will slow. Expanding overseas markets is an unavoidable proposition for Chinese car companies.

The potential of the Indian market is attractive enough, but there are many and great challenges, such as changeable policies, high taxes, high market concentration, low national spending power, and so on.

The biggest headache for car companies is the poor policy continuity and flexibility of India's auto industry, especially the related tax policies are very unfriendly. No wonder he Xiaopeng advised car companies to "choose countries with a friendly political and business environment" when laying out globalization.

In addition, India's national conditions are complex, each state has its own policies, and the market is not unified, which makes it more difficult for foreign-funded car companies to establish sales channels and provide after-sales services. Many of the world's auto giants are struggling to give up the Indian market in order to stop losses in time.

India's tax policy has also made foreign investors miserable, which has so far kept Tesla out of the South Asian continent.

In 2015, Indian Prime Minister Narendra Modi visited the United States and went to the Tesla factory to communicate with Musk. By 2017, Musk said, "this summer" into India. For more than five years, Tesla has been at odds with the relevant Indian authorities on the issue of taxation and the construction of factories.

Because the price of Tesla's model is high and the import tariff is as high as 100%, it is necessary to build a factory in India to avoid high taxes, which is what India wants most. But Musk insisted that "Tesla will not set up a production base in any place where car sales are not allowed first."

In fact, not only the import tax on cars in India is very high, but also the local consumption tax is not low, thus affecting the purchasing power of Indian residents. Toyota India has said that the high tax policy has so dampened the enthusiasm of foreign businessmen that they do not want to expand investment in India.

In the face of the Indian authorities' policies related to the automobile industry, foreign companies actually have no particularly good way to adapt or stay away. Considering the geopolitical reality, it is actually very risky for Chinese car companies to enter India. Since last year, Indian authorities have launched a series of tax investigations into Chinese companies, including SAIC.

Policy risks aside, if we simply look at the competition in the Indian automobile market, Chinese car companies are under a lot of pressure, and it is not easy to grab food from Maruti Suzuki and Tata Group. fortunately, new energy vehicles have opened a breakthrough for Chinese car companies.

Maruti Suzuki, the Indian champion, is not optimistic about the electrification of Indian cars, arguing that by 2030, the penetration rate of electric vehicles in India will be 8% Murray 10%, which is well below the Indian government's target of 30%.

Maruti Suzuki believes that compressed natural gas and hydrogen fuel are better new energy vehicle routes than electricity, and it is not planned to launch electric vehicles until 2025.

The strongest "ground snake" attitude undoubtedly leaves opportunities for Chinese new energy car companies, but it should be noted that India's Tata Group is launching electric vehicles, which is currently the highest electric vehicle brand in India. It occupies an absolutely dominant position.

In addition, India is still too poor. India's overall spending power is not comparable to that of China, and the price of new energy vehicles is much higher than that of fuel cars, which also restricts sales in the Indian market. therefore, Tata Group's main trams are minicars with lower prices, but BYD and SAIC play the brand of differentiation and take the high-end tram route, which will not pass.

Although India is very much like China, India is not China after all. The methodology of Chinese car companies in the Chinese market can not be copied to India. They should cross the river by feeling the stones based on local conditions. Do not expand blindly when you have achievements, be on guard against changeable policies, stop losses in time when you encounter setbacks, or abandon the fat in your mouth.

[full text reference]

[1] "car grave, India, no one has been able to climb out", Automotive Business Review

[2] "A brief Analysis of the Development of Indian Automobile Industry", Sun Longlin

[3] "Chinese car companies are optimistic about India", China Business Daily

[4] "Autonomous car companies might as well try the Indian market", China Automobile Daily

This article comes from the official account of Wechat: che Bai think Tank (ID:EV100_Plus), author: Qin Haiqing

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