Sources say Chinese automaker BYD wants to abandon its plans to invest $1 billion in the Indian EV market

China’s BYD has informed its India joint-venture partner that it will halt its plans for a new $1-billion investment to construct electric cars, following scrutiny from New Delhi, as stated by two individuals familiar with the discussions. BYD and its partner Megha Engineering and Infrastructures, a privately held company, submitted a proposal in April to jointly manufacture electric cars in India, according to Reuters. However, during the initial review, officials from three Indian ministries, including finance and external affairs, expressed security concerns about investment from the Chinese company and voiced opposition. Last week, BYD executives informed Megha Engineering that they wanted to withdraw from the investment pursuit, according to the two sources. It remains unclear if BYD might reconsider its decision, as they have not formally withdrawn the investment proposal from government review. BYD, China’s largest EV manufacturer, declined to comment on the status of its investment proposal and whether it plans to withdraw the plan to produce electric cars in India. Megha Engineering and the Indian ministries did not respond to requests for comments. During a meeting last week, Megha Engineering requested BYD to wait for further clarity before dropping the manufacturing plan for electric cars. BYD was aware that its investment proposal would be met with political sensitivity due to the scrutiny of Chinese investments in India and had tried to address concerns in advance. The proposal highlighted features such as voice-activated commands in Indian languages for apps in BYD electric cars built in India, as well as housing all vehicle data in India. BYD had planned to commence production in India by 2025. Since 2020, India has subjected Chinese investments to closer scrutiny following border clashes between the two nations. Great Wall Motor of China also abandoned its $1-billion investment plans after failing to obtain clearances from the Indian government. The final decision regarding BYD’s investment proposal will be made by the Indian ministries of trade and heavy industries. BYD initially entered the Indian market in 2007, producing batteries and components for mobile phone manufacturers. In partnership with Megha Engineering, BYD began manufacturing electric buses in India in 2013 under the joint venture company called Olectra Greentech. BYD has already invested over $200 million in India and currently offers the Atto 3 electric SUV and e6 EV to corporate fleets, with plans to launch sales of its Seal electric sedan later this year. According to government registration data, BYD has sold around 1,950 cars in India since starting sales in 2022. The EV market in India is still relatively small but growing, with Tata Motors dominating sales. Electric vehicles accounted for less than 2% of total car sales in 2022, but the government aims to increase this percentage to 30% by 2030.