Why is Tamil Nadu becoming a Sweet Spot for EV Investments?
The recently concluded Global Investors Meet (GIM) in Tamil Nadu saw huge investments from tech, auto, energy, and manufacturing companies from across the globe. The state bagged a total investment of over INR 6.6 lakh crore, with a substantial amount allocated for EV development. Already seen as a hub for auto manufacturing, and Chennai being considered as the ‘Detroit of Asia‘, Tamil Nadu is slowly becoming the EV Capital of India. Stakes on TN Last year alone, Tamil Nadu contributed to 40% of the country’s EV production. Out of the ten lakh EVs sold, more than four lakh were manufactured in Tamil Nadu. Of all the EV two-wheelers sold in India, a whopping 68% was manufactured in the state. Adding to the existing EV factories in the state, many new investments were announced this week. Vietnamese electric car manufacturer VinFast has committed to investing $2 billion to set up a manufacturing plant in Tamil Nadu. The factory construction will begin this year with an initial investment of $500 million for the first phase of the project, and is said to generate 3500 jobs and produce 150,000 EVs annually. To expand into key markets, VinFast’s investment commitment is also a bid to take on its biggest EV competitor Tesla. Banking on the east coast state that houses a number of auto manufacturing companies, Vinfast’s approach to start a factory in Tamil Nadu is a strategic one. Interestingly, Elon Musk’s Tesla is also deciding to start a new manufacturing plant, however, that is set to happen in Gujarat. Hyundai Motors is also set to invest ₹6180 crore to boost the EV sector in Tamil Nadu. The company is gearing up to establish a ‘Hydrogen Valley Innovation Hub’ to bolster the growth of green energy. Furthermore, Hyundai had earlier committed to investing ₹20,000 crore over the next ten years. Last year, Ola Electric committed to investing ₹7600 crore to build the world’s largest EV facility at a single location spread across 2000 acres. Advanced cell and EV manufacturing facilities, vendor supplier parks and ancillary ecosystem will be part of the EV hub built in the state. EV two-wheel company Ather Energy already has two plants in Hosur and is looking to expand further. A Tamil Nadu Manufacturing Affair As per a report published last year, Tamil Nadu earns 8% of its GDP from the automobile industry. The foray into the automobile sector dates back to early 90s when the Indian economy had faced liberalisation and private companies were breaking the shackles of setting up industries. Ford Motor in a joint venture with Mahindra & Mahindra set up the first car facility closer to Chennai. Since then, TN is synonymous with auto manufacturing, with a number of companies setting their base there. With OEM and component manufacturing factories also set up in TN, the facilitation of EV factories will be simpler. Suitable government policies such as reduction of tariff for EV charging stations will allow more EV stations to come up, thereby promoting EV adoption too. Furthermore, Tamil Nadu’s Electric Vehicles Policy 2023, looks to make Tamil Nadu the EV manufacturing hub of South-East Asia. Incentives under EV Special Manufacturing Package and tax exemptions for EV companies have been driving these companies in a big way. While TN is already big on EV factories, another state is slowly catching up to become the next desirable stop for EV production. Gujarat Close on the Heels The Vibrant Gujarat Summit that is under way in the state, is expected to unveil huge announcements in EV production. With Tesla already expected to set up their first manufacturing plant in the state, Tata Motors’ famed Sanand plant will also grow into a central hub for EV initiatives. Maruti Suzuki also has an EV plant in the state. Yesterday, Gensol Engineering, operator of solar projects, committed to investing ₹2000 crore to set up an EV manufacturing plant in Gujarat. With more announcements in the pipeline, Gujarat is close behind on grabbing more EV deals.
First an automobile manufacturing hub, now the EV hub, TN seems to attract them all.
First an automobile manufacturing hub, now the EV hub, TN seems to attract them all.
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As a rare blend of engineering, MBA, and journalism degree, Vandana Nair brings a unique combination of technical know-how, business acumen, and storytelling skills to the table. Her insatiable curiosity for all things startups, businesses, and AI technologies ensures that there's always a fresh and insightful perspective to her reporting. She now hosts her tech segment 'Point Break' on AIM Tv.