Reliance infrastructure explores entry into EV market, hires former BYD executive

Reliance Infrastructure, a key player in the Anil Ambani-led Reliance Group, is reportedly exploring plans to manufacture electric cars and batteries. Sources close to the matter have revealed that the company has brought on board Sanjay Gopalakrishnan, a former India executive of Chinese EV giant BYD Co, to advise on these ambitious plans.

According to the sources, who spoke on condition of anonymity due to the sensitive nature of the information, Reliance Infrastructure has engaged external consultants to conduct a comprehensive "cost feasibility" study. The study aims to assess the viability of establishing an EV manufacturing plant with an initial annual capacity of approximately 250,000 vehicles. The company envisions scaling this capacity up to 750,000 vehicles over the coming years, signalling a long-term commitment to the sector.

In addition to vehicle production, Reliance Infrastructure is also exploring the possibility of setting up a battery manufacturing facility. The proposed plant would start with a capacity of 10 gigawatt hours (GWh) and could potentially expand to a substantial 75 GWh over a decade. This move aligns with the growing demand for locally produced batteries in India's EV ecosystem.

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The entry of Reliance Infrastructure into the EV space could mark a significant shift in the Indian automotive landscape. It would also set the stage for an intriguing business rivalry between the Ambani brothers. Mukesh Ambani's Reliance Industries is already making strides in the EV sector, having recently secured government incentives for 10 GWh of battery cell production.

When approached for comment on these developments, Reliance Infrastructure did not respond. Similarly, Sanjay Gopalakrishnan, who has joined as a consultant to advise on the EV project, was unavailable for comment.

The Indian government has set ambitious targets for EV adoption, aiming to increase the share of electric vehicles from the current less than 2% to 30% by 2030. To support this goal, the government has allocated over $5 billion in incentives for companies engaged in local manufacturing of EVs and their components, including batteries.

Reliance Infrastructure's potential entry into the EV market comes at a time when the sector is gaining momentum but still represents a niche segment in India. In the last fiscal year, out of the 4.2 million cars sold in the country, electric models accounted for less than 2%. However, with government support and increasing consumer interest, the market is poised for significant growth.

The company is reportedly exploring partnerships, including with Chinese firms, to bolster its EV ambitions. Sources indicate that Reliance Infrastructure aims to finalise its plans within the next few months, suggesting a swift movement towards implementation if the feasibility studies prove favourable.

In preparation for this potential venture, Reliance Infrastructure has already taken concrete steps. Government records show that in June, the company formed two new wholly-owned subsidiaries related to the automotive sector. One of these, named Reliance EV Private Ltd, has its "main objective" listed as manufacturing and dealing in "vehicles of every description and components for transport and conveyance using any nature of fuel."

However, the path forward for Reliance Infrastructure's EV plans may not be without challenges. The company has grappled with high debt levels and cash flow issues in recent years, raising questions about how this ambitious EV project will be funded.

If Reliance Infrastructure decides to move forward with its EV plans, it will enter a market that is becoming increasingly competitive. Currently, Tata Motors dominates the Indian EV space with a nearly 70% market share. Other players like MG Motor (owned by SAIC) and BYD are gaining ground, while traditional auto market leaders Maruti Suzuki and Hyundai Motor are planning to launch their EVs in 2025.

The appointment of Sanjay Gopalakrishnan as a consultant brings valuable industry expertise to Reliance Infrastructure's potential EV venture. Gopalakrishnan retired from BYD earlier this year after a two-year tenure during which he headed and established BYD's electric passenger vehicle business in India. His experience in launching three EV models and setting up a dealership network could prove crucial for Reliance Infrastructure's market entry strategy.

As the Indian EV market continues to evolve, the potential entry of Reliance Infrastructure could significantly alter the competitive landscape. With government support, growing consumer interest, and the backing of a major industrial group, this move could accelerate the adoption of electric vehicles in India and contribute to the country's broader goals of reducing carbon emissions and enhancing energy security.