South Korea’s Hyundai Motor on Thursday said it will spend $2.45 billion to expand production and introduce new electric vehicle models in the southern state of Tamil Nadu.
The carmaker, through its Indian subsidiary Hyundai Motor India, will also set up a battery pack assembly unit with an annual capacity of 178,000 units and install 100 EV charging stations across the state, it said in a statement.
The investment will be made over the next four to five years, and is aimed at increasing Hyundai’s presence in the Indian market, which is expected to become the world’s third largest automobile market by 2025.
The funds will be used to develop new models of electric vehicles as well as upgrade the company’s existing facilities in India to increase production capacity. The investment will also help Hyundai strengthen its supply chain and increase localization of parts production.
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Apart from the investment, Hyundai has also announced plans to launch at least three new electric vehicles in the Indian market by 2023. The new model will be part of Hyundai’s global EV lineup, which includes the Ioniq 5, Kona Electric, and Nexo .
Hyundai has been present in the Indian market for over two decades and currently has two manufacturing plants in the country, with a total annual production capacity of 750,000 units. The company is also a major exporter of vehicles from India, and exports account for around 25% of its production in the country.
The company added that it plans to increase its total production volume in the country to 850,000 per year.
Hyundai’s move comes weeks after the federal government said it would raise taxes on imported cars and motorbikes, including electric vehicles (EVs), as it seeks to boost domestic manufacturing.
India’s EV industry has grown rapidly with the launch of the MG Motor line-up from domestic carmakers Tata Motors and Mahindra & Mahindra, as well as global rivals BYD and SAIC .
The new investment is expected to create new jobs in India and help the country transition to electric mobility. The Indian government has set a target of 30% of all vehicles being powered by electricity by 2030 and Hyundai’s investment is expected to play a key role in achieving this target.