Will Hyundai’s ‘top-down’ strategy be enough to grab India’s EV market?

• Hyundai recently announced that they will be launching electric vehicles (EVs) across all price segments in India.
• The South Korean motor company has initiated a study into the parameters of manufacturings EVs in India.
  
• The Kona SUV, launching in India next year, is meant to serve an example of Hyundai’s EV technology.

The newest car manufacturer to push the electric vehicle (EV) bandwagon further in India is Hyundai with the promise of launching a whole range of EV cars for every price segment. The South Korean automobile manufacturers’ announcement follows Maruti Suzuki’s plans to launch their own EVs by 2020.

The plan is already rolling with Hyundai commissioning a study to look into manufacturing of EVs in India. Even the electric model of the Kona SUV is set to launch in 2019 and is meant to serve as an example of Hyundai’s EV technology for future projects.

Hyundai’s India strategy

According to the company, they’ll be following a ‘top-down’ approach for launching their vehicles in India. A ‘top-down’ approach implies starting with the bigger picture and figuring out the sub-systems as it breaks down into smaller segments. Basically, rather than create a car and then look for the market, they’re going to look at the market at large and then create a car for it.

Currently, the motor company is looking into battery manufacturing and sourcing their materials locally. Which is actually a smart move considering the uncertainty and volatility around the state-run Energy Efficiency Services Ltd’s tender. As of the last month, the second tender they had issued was scrapped away entirely.

That being said, the tender has set aside 20% specifically for high-end sedans which fall into Hyundai’s wheelhouse. And it is not that Indian industry did not express their displeasure over the government giving more priority to luxury cars.

Even the Kona SUV falls in the range of ₹20-25 lakhs.

The obstacles

The success or failure of Hyundai’s strategy largely depends on when the economies of scale and government incentives kick in.

Subsidies on the price of the vehicles could boost demand and woo consumers in changing their preferences. Meanwhile, developing a whole ecosystem to support the manufacturing of EVs would bring in economies of scale and cost reductions for the manufacturer.

The Faster Adoption and Manufacturing of Hybrid Electric Vehicles Scheme 2 (FAME 2) of the National Electric Mobility Mission Plan (NEMMP) will ideally determine all the details. A recent statement from the government asserted that the policy would focus on the demand-supply side of the sector.

Even though Hyundai may not be the largest car maker in India, its Indian operations have been the fastest growing production bases for the company. As of now, India’s production accounts for 15% of the company’s total production.

Globally, the automobile manufacturer has plans of launching 38 green vehicles, but, as of now, reports indicate that not all of them will make it to Indian shores.