BYD tells India partner it wants to drop $1 bln EV investment plan-sources

Olectra Greentech

28/07/2023 09:57

By Sarita Chaganti Singh
       NEW DELHI, July 28 (Reuters) - China's BYD  002594.SZ 
has told its India joint-venture partner it would shelve plans
for a new $1-billion investment to build electric cars after its
investment proposal faced scrutiny from New Delhi, two people
with knowledge of the discussions said. 
    BYD and its partner, privately held Megha Engineering and
Infrastructures submitted a proposal to the Indian government in
April to jointly build electric cars in India, Reuters reported
earlier this month.
    But in the initial review, officials from three Indian
ministries, including finance and external affairs, raised what
two Indian officials described as security concerns about
investment from the Chinese company and signalled opposition.
    BYD executives told Megha Engineering last week that the
battery and EV maker wanted to drop pursuit of the investment,
according to the two people with knowledge of that exchange.
    It was not immediately clear whether BYD could have
second-thoughts, and as of Thursday BYD had not formally
withdrawn the investment proposal from government review, the
two officials with knowledge of the review said.
    BYD, China's largest EV maker, declined to comment on the
status of its investment proposal and whether it would pull the
plan to produce electric cars in India.
    In a statement to Reuters, the company said it has had a
presence in India for 16 years, selling both passenger cars and
electric-drive buses.
    India's finance, external affairs and home ministry did not
reply to an email seeking comment. Megha Engineering did not
respond to request to comment.
    During a meeting last week, Hyderabad-based Megha
Engineering urged BYD to wait for more clarity on the situation
before moving to drop the electric cars manufacturing plan,
according to the two people with knowledge of the discussion.
    BYD had understood its investment proposal would be
politically charged because of the scrutiny of Chinese
investment in India and had attempted to head off concerns, the
two people with knowledge of its planning said.
    For instance, the proposal said voice-activated commands for
apps would be available in Indian languages in BYD electric cars
built in India and that all data from the vehicles would be
housed in India, one of the people said.
    BYD had proposed starting production in India by 2025, the
people familiar with the plan said.
    India began subjecting investment from China to closer
scrutiny in 2020 amid a series of border clashes between the two
countries.
    China's Great Wall Motor  01633.SS  shelved its plans to
invest $1 billion after failing to get clearances from the
Indian government. 
    A final decision on whether to approve BYD's investment
proposal would be taken by Indian ministries of trade and heavy
industries. 
    BYD, the world's largest producer of EVs and plug-in hybrid
vehicles, entered the Indian market in 2007 producing batteries
and components for mobile phone makers. 
    In 2013 it started building electric buses in India with
Megha Engineering, under a joint venture company called Olectra
Greentech  OLEC.NS .
    BYD, which has already invested over $200 million in India,
markets the Atto 3 electric SUV and the e6 EV to corporate
fleets and plans to launch sales of its Seal electric sedan
later this year. 
    BYD has sold about 1,950 cars in India since starting sales
in 2022, according to government registration data.
    India's EV market is small but growing with domestic
automaker Tata Motors  TAMO.NS  dominating sales. Electric
models made up less than 2% of total car sales in 2022 but the
government wants to grow this to 30% by 2030.

 (Additional reporting by Aditi Shah in New Delhi and Zoey Zhang
in Shanghai; Editing by Kevin Krolicki & Simon Cameron-Moore)
 ((Aftab.Ahmed@thomsonreuters.com; +91 99109 33884; Reuters
Messaging: twitter: @aftabahmed00))