BYD, A chinese car manufacturer that also makes batteries, wants to invest in India. The cost of investment is so huge, around 1 billion dollars. This is not a small amount. BYD wants to collaborate with a local car manufacturer of India, Megha Engineering and Infrastructures Limited (MEIL). This company is situated in Hyderabad.
We need fossil fuels for our daily life. Food is made from fossil fuels. Fossil fuels make us warm. Cars need conventional fuels like petroleum, diesel. These are fossil fuels. But there are some limitations of fossil fuels. Fossil fuels are limited. We can’t generate fossil fuels. Fossil fuels will end one day. So we have to find another source of energy.
Electric Vehicles can be the future of the automobile industry. Many companies investing in the Electric Vehicle sector for the future. TESLA is a renowned company in the Electric Vehicle sector.
But Indian Govt. doesn’t allow BYD to invest in India. Because relations between India and China are not so good. There are some security reasons why the Indian Government doesn’t allow BYD to invest in India. Home and external affairs ministries’ officials are concerned with this investment deal. They just don’t want Chinese players to get full access to the Indian market of EV(Electric Vehicle).
Indian Govt. stated that Chinese companies that are established in India already are dummy companies. They are established as a corporation of Indian and Chinese companies together. But later, the Chinese get full power over corporations. Important factors like technology, decision making are in the hands of the Chinese party who is in the corporation. Earlier, Indian Govt. tightened FDI(Foreign Direct Investment) policies. This decision will only be for the countries that share borders with India.
This decision is affected by an incident. In Ladakh, Indian and Chinese troops clashed. Both soldiers were killed in this incident. Around 20 soldiers died in this incident. But about the loss of Chinese troopers, there is no data available.
BYD(Build Your Dream)
BYD is so famous for its Electric Vehicles production. BYD leads the Electric Vehicle sector in the world. He is renowned in the plugins of the hybrid vehicles sector. BYD has been interested in India for a long time. Because India is the third largest car market.
India comes in second place in population. Every year India’s population increases the total population of australia. Indian customer demand is like a low end affordable car. This is China’s speciality of production. China can lower its cost of production.
Cost of Production
Cost of production depends on many factors. China has many advantages for lowering the cost of production. China has easy availability of cheap labour which reduces cost. China produces in mass production. Mass production provides Economies of scale which help in lowering cost.
Economies of Scale means special benefits they receive from increasing the scale of production. When a producer purchases raw material in huge amounts. They receive a discount on the purchase of raw material. Discount received on purchase of raw material lowers the cost of production. China has a favourable policy for production. Chinese govt. provides subsidies for their company.
BYD has a presence in India already. They sell their products for corporate fleets. e6 electric sedan and Atto 3 electric SUV are available in the market of India. But BYD wants to penetrate the Indian Electric Vehicle market for mass production in 2023.
Indian Govt. set a goal of 30 percent Electric Vehicle of total cars in 2030. Indian Govt. start giving incentives and subsidies to promote companies to invest in India in the Electric Vehicle sector.
Megha Engineering and Infrastructures(MIEL) is a company who builds roads, bridges and power plants. It has no experience of Electric Vehicle production.
This project will be for longterm. BYD will be the brand name for the company. If this investment is successful, they will produce a variety of hatchbacks to luxury models. They also want to move in the sector of Electric buses and trucks.
BYD wants to compete with TESLA, who is still the biggest electric vehicle company whose sales is the largest in the world. If this joint venture is successful, they will get a share of the Electric Vehicle sector. They can get an increased share of the market for Electric Vehicles.
BYD increased its efforts to reach in the Indian market of automobiles, because Elon Musk, TESLA’s owner wants to establish its venture in India. And Elon Musk met India’s Prime Minister. And Elon Musk said he is a Fan of Prime Minister Narendra Modi, Prime Minister. And the Prime Minister of India pushes Elon Musk to establish an Electric Vehicle venture in India.