CHENNAI, May 11 (Reuters) – South Korea’s Hyundai Motor Co (005380.KS) said on Thursday it will invest 200 billion rupees ($2.45 billion) in the Indian state of Tamil Nadu over the next 10 years to beef up electric vehicle production in the world’s most populous country.

Tamil Nadu’s Chennai, dubbed the Detroit of Asia, is a hub for automobile manufacturing where the likes of Ashok Leyland (ASOK.NS), TVS Motor (TVSM.NS) and Renault-Nissan churn out millions of vehicles every year.

Hyundai, through its Indian subsidiary Hyundai Motor India, will also set up a battery pack assembly unit with an annual capacity of 178,000 units and install 100 EV charging stations across the southern state in the next five years, it said in a statement.

The company plans to increase the production volume at its factory near Chennai to 850,000 vehicles per year from roughly 775,000 currently. However, the car maker did not disclose a timeline to achieve the target, citing volatile demand.

Hyundai also expects its export volumes to hit 319,000 vehicles by 2032, from 181,000 in 2022.

The investment plan comes days after India’s federal government said it would raise taxes on imported vehicles to boost local manufacturing.

Hyundai is also developing a local vendor base for EV parts instead of importing them, as the government’s production incentive scheme is applicable only when manufacturing is done within the country, Puneet Anand, a senior executive for corporate affairs, said in a news conference.

India’s EV industry is growing rapidly with a slew of launches by domestic carmakers Tata Motors (TAMO.NS) and Mahindra & Mahindra (MAHM.NS) as well as global rivals Nissan Motor 7201.T and Renault SA RENA.PA.

Hyundai is lining up five new EV launches in the third largest car market in the world, targeting a 20% share by 2032.

However, India’s EV market is still small, accounting for barely 1% of the country’s total car sales in 2022. The federal government aims to push that share to 30% by 2030.

Hyundai holds about 15% share in India’s passenger vehicle market, only behind top car maker Maruti Suzuki India, the local unit of Japan’s Suzuki Motor (7269.T).

($1 = 81.7800 Indian rupees)

Reporting by Praveen Paramasivam in Chennai; Editing by Janane Venkatraman

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