Customer Logins

Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.

Customer Logins

Suzuki Motor to make inroads into India’s EV market with $1.2-billion Gujarat plants: analyst

25 March 2022 Max Tingyao Lin

Japan's Suzuki Motor is seeking to enter India's rapidly expanding market for electric vehicles (EVs) by investing INR 104 billion ($1.23 billion) in local manufacturing facilities, according to an S&P Global Mobility analyst.

During the India-Japan Economic Forum held in New Delhi last weekend, Suzuki signed a memorandum of understanding (MOU) with the Gujarat state government to establish production plants for EVs and batteries by 2025-2026.

"The latest investment marks the first major EV plan by Suzuki for the Indian market as it seeks to firm up its strategy in the EV segment," said Isha Sharma, senior research analyst with S&P Global Mobility. "Suzuki's announcement comes as no surprise as the EV segment is gaining traction in India."

India, which has targeted to cut energy intensity by 2030 and achieve net-zero emissions by 2070, sees a higher market share for EVs as a cornerstone of its decarbonization strategy.

During the COP26 summit last November, the world's third largest GHG-emitting nation pledged to working towards to only sell zero-emission vehicles by 2040. This came on top of a national target of 30% EV sales by 2030.

Since 2019, the Indian central government has allocated $1.4 billion to the Faster Adoption and Manufacturing of Electric Vehicles scheme to subsidize purchases of electrical cars, buses, two- and three-wheelers.

The country's EV market size is expected to grow from $1.4 trillion in 2021 to $15.4 trillion by 2027, according to Mordor Intelligence's estimates.

Suzuki's investment will help it take on key rivals like Hyundai Motor, Tata Motors, MG Motor, Mahindra & Mahindra, and Kia, which have either already introduced electric models in India or have announced plans to do so, Sharma said. Luxury automakers such as Jaguar, Audi, Porsche, and BMW also launched EVs in the country last year.

Toshihiro Suzuki, president of Suzuki, which has been operating in India via Bombay-listed subsidiary Maruti Suzuki for decades, said the investment can help reach carbon neutrality and realize "Self-reliant India"—Indian Prime Minister Narendra Modi's flagship policy in boosting domestic manufacturing capacity in a post-Covid recovery.

According to the company's investment plan, Suzuki will spend INR 31 billion to increase production capacity at its Gujarat plant for EV manufacturing by 2025 and INR 73 billion to establish a new plant nearby to produce EV batteries by 2026.

Maruti Suzuki Toyotsu India, a 50:50 joint venture between Maruti Suzuki and Toyota Tsusho, will use the remaining INR 450 million to construct a vehicle recycle plant by 2025.

The investment plan comes as India maintains a 60% duty on imported cars priced up to INR 3 million and a 100% duty on those priced above, regardless of their propulsion systems. Tesla has been lobbying for the government to lower the tariffs in vain, and the world's largest EV maker is yet to enter the Indian market.

According to S&P Global Mobility's light vehicle powertrain and alternative propulsion production forecast, 46,577 electric passenger vehicles will be manufactured in India this year versus 13,066 units in 2021. Tata Motors currently accounts for over 80% of the production.

Japan-India ties

Suzuki's MOU was sealed when Japanese Prime Minister Fumio Kishida made his first visit to India as the head of government. The two countries announced that Japan will facilitate ¥5 trillion ($41 billion) in public and private investment and financing in India in the next five years, while vowing to enhance cooperation in multiple areas like decarbonization, cybersecurity, and wastewater management.

As part of the cooperation, India and Japan launched the Clean Energy Partnership to promote the energy transition via EVs, batteries, renewables, clean hydrogen and ammonia, carbon capture, among others.

The two countries said they will work together on manufacturing, research and development, transfer of technology, training and capacity building, and low-cost, long-term financing.

"The partnership will lead to clean growth by boosting job creation, innovation and investments. It will also demonstrate to the world that India and Japan are at the forefront in delivering on the ambitious climate and sustainable development goals," according to a joint statement.

Japan, which has aimed to reach carbon neutrality by 2050, is home to some of the world's largest vehicle manufacturers. Aside from Suzuki, Toyota Motor, Honda Motor, and Nissan already have manufacturing plants in India and could launch EV production lines in the coming years.

Based on the Self-reliant India policy, qualified auto component manufacturers and automakers can apply for subsidies under the Production Linked Incentives scheme. "It is likely that more Japanese companies would set up their manufacturing plants as the Indian government is working to create a conducive for new investments," Sharma said.

Posted 25 March 2022 by Max Tingyao Lin, Principal Journalist, Climate and Sustainability

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.


Follow Us

{"items" : [ {"name":"share","enabled":true,"desc":"<strong>Share</strong>","mobdesc":"Share","options":[ {"name":"facebook","url":"","enabled":true},{"name":"twitter","url":"","enabled":true},{"name":"linkedin","url":"","enabled":true},{"name":"email","url":"?subject=Suzuki Motor to make inroads into India’s EV market with $1.2-billion Gujarat plants: analyst | IHS Markit &","enabled":true},{"name":"whatsapp","url":"","enabled":true}]}, {"name":"rtt","enabled":true,"mobdesc":"Top"} ]}
Filter Sort