Suzuki Motor is reportedly looking to make India its first EV production and export hub, a rare case for Japan-based companies as they typically establish domestic production before global expansion.
Nikkei quoted sources saying that Suzuki had chosen India as its first EV production hub due to its huge market and low manufacturing cost. Suzuki will also position India as an EV export hub. According to Nikkei, Japan-based carmakers such as Toyota and Nissan began developing products and making EVs in Japan before moving the production lines to other countries.
Manufacturing cost was cited as a factor for Suzuki to position India rather than Japan for its first EV production site. According to the 2022 Survey on Business Conditions of Japanese Companies Operating Overseas by the Japan External Trade Organization (JETRO), manufacturing cost in India is 79.2% of that in Japan.
In March 2022, Suzuki said it planned to invest JPY150 billion (US$1.3 billion) to build EVs and batteries in India's western state of Gujarat. EVs and batteries are expected to enter mass production in 2025 and 2026, respectively.
Another factor for Suzuki to produce EVs in India can be attributed to the market potential in India, which surpassed Japan in becoming the third-largest vehicle market in 2022. According to Vahan Dashboard, despite a low penetration rate in the overall four-wheeler market, India's electric four-wheeler registrations more than doubled from 42,960 units in 2022 to nearly 100,000 in the first nine months of 2023.
Maruti Suzuki, Suzuki's Indian subsidiary, said in 2022 that the carmaker's focus is other low-carbon vehicles such as those running on CNG or biofuels and hybrid vehicles. India-based Tata Motors enjoyed an approximate 73% market share of India's electric four-wheeler market from January to September 2023.
Meanwhile, according to The Economic Times, India may launch an incentive policy to encourage local production of electric four-wheelers based on related investments. Besides the rumored plans by Suzuki, Korea-based Hyundai and Vientma-based VinFast unveiled plans to make EVs in India. Tesla is reportedly talking with the Indian government about similar plans.
Source: JEITRO, February 2023
