Electric vehicle sales in India have been growing at a fairly fast clip over the past 12-18 months. But, the overall industry is still at a nascent stage, with sales accounting for less than 5 per cent of the total vehicle sales in the country. The entry of strong business groups like JSW in this space could give it a shot in the arm.
Chinese automobile giant SAIC Motor and the Sajjan Jindal-led JSW have entered into a strategic joint venture aiming to "accelerate the transformation and growth" of MG Motor in India. Under the agreement, the JSW Group will hold a 35 per cent stake in the Indian JV operations. SAIC will continue supporting the JV with advanced technology and products.
"The joint venture paves the way for bringing world-class technology-enabled futuristics suite of automobile products including the new generation of intelligent connected NEVs and ICE (internal combustion engine) vehicles," said Parth Jindal of the JSW Group.
JSW is among the largest steel manufacturers in India and also has interests in areas like cement, paints, energy and infrastructure.
British brand MG, which is owned by China's SAIC, entered India in 2017, with sales and manufacturing beginning two years later.
In the backdrop of the border and diplomatic tensions between India and China, MG has found the going tough to scale up. SAIC's FDI proposal has been reportedly stuck for a few years now. So, the company turned its attention to finding a local investor to drive around the bottlenecks. JSW, which has harbored interests in the electric vehicle space for a few years now, seems to be a great fit.
"The JV's focus on broader localisation initiatives will yield financially accretive synergies through economies of scale, while providing the highest level of customer service to the Indian consumer," said Parth Jindal.
Since starting manufacturing and selling the Hector SUV back in 2019, MG Motor has sold close to 2 lakh units in the country. In addtion to the Hector, the company also sells the Astor and Gloster ICE SUVs and the ZS and Comet EVs. It has thus far invested Rs 7,000 crore in the Indian operations.
Jindal said that one of the key focus areas of the joint venture will be to pursue the development of the EV ecosystem and to take a leadership position in this space.
More than one million electric vehicles have been sold in India in the first ten months of 2023. However, electric two-wheelers and three-wheelers account for around 94-95 per cent of them. Further, within passenger electric vehicles, Tata Motors is the dominant player with over 70 per cent market share.
"In the growing Indian automotive market, both partners shall work closely to bring in the best of innovation, in creating greener and smarter mobility products and services for our consumers, seizing market opportunities, continuously expanding the brand influence and market share of our products, and achieving greater success for MG in India," said Wang Xiaoqiu, the president of SAIC Motor.
The JV will look to leverage JSW's large presence across sectors here to augment local sourcing and establishing a robust supply chain.
Jindal said he looks forward to building one of India's largest automobile companies together with SAIC and MG.
To succeed, Jindal will have to battle well established domestic giants like Tata Motors and Mahindra Group, both of which will be launching slew of new EVs in the next 2-3 years. Passenger vehicle market leader Maruti Suzuki, Hyundai, Toyota and Volkswagen Group among others are also eyeing bigger chunk of the growing pie.
On Friday morning, shares of JSW Group companies were trading in the green, with JSW Holdings surging over 4.5 per cent. Separately, JSW Infra was up 1.8 per cent, JSW Energy rose 1.7 per cent and JSW Steel gained 0.3 per cent.