BYD plans to invest $1 billion to build factories in India, why do global car companies go to India?
BYD plans to invest $1 billion to build a factory in India.
Tesla is also preparing to build a gigafactory in India with an annual output of 500,000 vehicles. China's SAIC Motor completed and put into operation a MG plant in India as early as 2019, producing not only fuel vehicles, but also electric vehicles.
But in the field of new energy vehicles, the real two giants have to be Tesla and BYD. Tesla and BYD are two pure new energy vehicles, Tesla does not have a production line for fuel vehicles, and BYD has long ceased the production of pure fuel vehicles. Tesla and BYD's entry into India will inevitably open a new era for India's new energy vehicle industry. In particular, BYD, highly similar to Xiaomi in the era of mobile phones, is cheaper, gasoline-electric hybrid, and adapts to road conditions higher, which can accelerate the popularity of new energy vehicles in India.
Before Chinese mobile phones did not enter India, local mobile phone manufacturers in India were still producing low-quality and low-cost copycat smartphones. It wasn't until Xiaomi OV entered India that India really entered the era of intelligence. It can be said that Chinese mobile phone manufacturers have helped India at least complete the mobile Internet revolution 10 years ahead of schedule and realized the popularization of Indian smartphones.
For this, the price paid by India is the destruction of local mobile phone manufacturers. However, the Indian government has snatched back the money not earned by India's local mobile phone factories through large fines.
In the field of new energy vehicles, India's introduction of BYD and Tesla is not to support India's local new energy vehicle factories. Because there are no new energy vehicle factories in India. In the Indian market, the biggest rivals of BYD, Tesla and SAIC MG are not Indian companies, but Japanese car companies. 40% of the market share of Indian automobiles is occupied by Suzuki of Japan. Suzuki is India's largest car company, with the highest degree of localization, and the main thing is cheapness. Counting Japanese brands such as Toyota, Honda, and Nissan, Japanese cars occupy half of the Indian auto market.
BYD, Tesla, and SAIC MG jointly entered India to grab meat from the mouths of Japanese car companies. According to Tesla's plan, the 150,000-level Model 2 has been designed and will be the first to be mass-produced in the Mexican factory. After the completion of the Indian factory, the Model 2 will further expand production in India. The captain predicts that the construction of Tesla's Indian factory will also be handed over to the team in Shanghai, China. The Mexican plant is led by the Shanghai team, and strives to complete the construction and start production in 12-15 months.
To achieve this efficiency, the Indians will never be able to do it, and can only rely on the Chinese team. But Tesla's Indian factory has no specific investment plan, and Musk has only expressed an intention. It's BYD who is really ready to start making a big difference. BYD is preparing to shell out $1 billion to build a second plant in India. Why the second factory? Because as early as 2013, BYD built a Sino-Indian joint venture electric bus factory in India.
Previously, SAIC MG India was widely rumored that the Indian government intended to take coercive measures to lower the valuation of MG India and take away the controlling stake of MG India at a low price. This rumor was denied by SAIC. However, SAIC also acknowledged that there are equity talks with the Indian side. However, SAIC made it clear that it will never give up its controlling stake in MG India.
Why is this the case? The fundamental reason is that SAIC entered India too early. SAIC Motor entered India as a 100% foreign-owned automaker. MG India is 100% owned by SAIC. However, India wants to copy China's joint venture automobile road, and does not want SAIC, a pure foreign-funded car company, to become bigger and stronger. It's like Germany's Volkswagen, Japan's Toyota, and American GM entering China and having to form a joint venture with a Chinese state-owned car company.
The same is true for India. Japan's Suzuki is India's largest joint venture brand. Toyota and Honda are also joint venture brands in India, and the establishment of joint ventures with local Indian companies can make a splash in India. It is quite possible that MG India will sell a part of its stake in a local company. BYD's electric bus plant in India is also a joint venture with a local company.
This time, BYD plans to invest $1 billion to build a second plant in India, also a joint venture factory, which is an infrastructure giant group in India. In the captain's opinion, Tesla may not be so eager to enter India. Tesla in China, Mexico, and Germany all exist as sole proprietorships, and there is no precedent for joint ventures. Tesla is not necessarily willing to build a joint venture with an Indian company. China has opened the door to sole proprietorship for Tesla, why should India engage in joint ventures?
Why is BYD entering India? Will it repeat the mistakes of the Xiaomi Group? In the captain's view, after making money, it is inevitable to be fined by the Indian government. But with the bumper of the joint venture, it will not be punished to death, which will roughly be equivalent to a disguised tax for multinational groups, occasionally knocking a bamboo bar.
However, Chinese car companies still cannot give up the Indian market for three reasons:
One is that China's auto industry has a much better technological base than India. However, the establishment of China's independent automobile brands has still been retrograde for more than 40 years, and only today has it been equally divided with joint venture car companies, and its market share has exceeded 50% for the first time. Even if the market of joint venture car companies declines, at least 30% of the market share can be eaten.
As the world's largest automobile consumer market, China's 30% market share is also very large. Joint venture cars will just lose the dominant position of lying down to make money, but they are involved in grabbing the market, and the strength of joint venture car companies cannot be underestimated, and they are not afraid of price wars.
In contrast, Chinese car companies entering India to compete with Japanese cars can also eat new energy joint venture dividends in India for at least more than 30 years. Not to mention whether Indian car companies can rise, even if India's local auto industry rises, there will be 30% of the share, left for joint ventures to compete. India is also a populous country, and India's automobile consumption potential has not been released at all. If India's per capita GDP can grow to $8,000, India will become the world's next largest automobile consumer market.
Chinese car companies play Germany, Japan and South Korea, and India plays China in the era of fuel vehicles.
The second is that new energy vehicle technology is not only simply mechanized, but also complex and intelligent. Intelligent technology updates and iterations are extremely fast, and advanced chip industry support is also required behind it. In the chip area, India is still in a poor position. But China's chip industry is at the level of sitting on two to one. In the case that Indian chip manufacturing cannot catch up with China, it is difficult for the Indian auto industry to achieve corner overtaking in China.
Third, India has great potential. Human civilization is rushing forward, and India's GDP is also increasing year by year. Currently, India's GDP is roughly equivalent to China's 2006 level. Since 2009, China has been implementing the "car to the countryside" program, and cars have gradually become popular in China. India's development is not as fast as China's, but after entering 2030, the automobile consumer market will gradually explode.
At this time, it is a good time to enter India to build a factory and lay out in advance.
In the face of the possible hooliganism of the Indian government, in the captain's view, there is only one way: build an assembly plant only in India, and the core components and R&D team are located in China.
Even if India wants to grab money, it does not dare to grab too much. Multinational groups go overseas, there is no one that is not fined, and almost all American multinational companies have been heavily fined overseas. To keep other countries in awe, the only way to grasp the dominance and dominance of the local market and occupy the commanding heights of technology. Otherwise, the easier you are to be replaced, the easier it is to be bullied.