China’s BYD considers local assembly in India as dealers sit on hundreds of orders
BYD Co. is considering expansion options in India, including local assembly, to meet growing demand for the Chinese automaker’s electric vehicles, according to people familiar with the matter.
The company is considering some form of local assembly in India and is trying to obtain local safety and regulatory certifications for more models due to import quotas, the sources said, asking not to be identified because the plans have not been made public.
While India had previously rejected BYD’s plans to set up a full assembly plant in the country, the Chinese company is considering assembling semi-assembled parts that would be cheaper and easier to clear in terms of regulatory approvals, sources said. Officials added that any production move would follow the visit of senior BYD executives.
Strong demand has led the automaker to re-evaluate ways to bring more cars to the country, sources said, adding that dealers are sitting on hundreds of bookings. This is Tesla Inc offering discounts on some models to boost sales in India. It is in stark contrast to.
The discussions highlight both the opportunities and regulatory hurdles BYD faces in one of the world’s fastest-growing auto markets. These also reflect a strategic shift for the Chinese automaker; While New Delhi has in the past turned down the investment offer at a time when Chinese firms are under increased scrutiny, this is now doubling down in India. Ties between India and China have thawed somewhat since last year as both countries faced high tariffs imposed by the US.
A spokesperson for BYD did not respond to an email seeking comment on its India plans.
Diversifying beyond China has become increasingly important for BYD as domestic growth slows as electric vehicle subsidies decline and competition intensifies. It aims to increase deliveries to markets outside China by approximately 25% this year.
BYD’s India sales rose nearly 88% last year to around 5,500 vehicles, straining its ability to operate under rules that limit imports of each fully-built model to 2,500 units. This growth occurred despite import duties of up to 110% on fully manufactured cars due to a relatively lower price tag than Tesla’s. Using SKD assembly will reduce tariffs from 70% to 30%.
In India, the company sells the Atto 3 compact e-SUV and eMax7 multi-purpose vehicle (both approved for import beyond the 2,500-vehicle quota) along with the Sealion 7 and Seal sedan.
Undermining Tesla
The Atto 3 starts at 2.5 million rupees ($27,255), despite 70% import duty. This makes it one of Mahindra & Mahindra Ltd. in India’s mass electric vehicle segment. and Tata Motors Passenger Vehicles Ltd. While it is at the premium end, it lags behind Tesla. The Sealion 7, which sold 2,200 units in India last year, is priced between 4.9 million rupees and 5.5 million rupees; This is below Tesla’s Model Y, which starts at 6 million rupees.
The automaker has approached Indian auto industry regulators to point out how import curbs could constrain growth. Unlike Tesla, which continues to struggle against the same tariff hurdles, most of the inventory in the December quarter has been depleted, the people said.
Despite the temporary thaw between Chinese President Xi Jinping and Indian Prime Minister Narendra Modi that has led to the resumption of direct flights, policy support remains inconsistent.
Some BYD executives, including engineers and senior executives, have been visiting India since last year. But senior BYD executives who had planned visits last year have since postponed their trips, the sources said, without giving further details.
