Hyundai Motor India gears up for 21% capacity boost in H2 of FY26

Creta EV and three other electric cars to be launched in India, it added

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Hyundai Motor India (HMIL) is planning to partially start its new facility in Talegaon, Maharashtra, in the second half of 2025-26 (FY26). This will boost the total manufacturing capacity of India’s second-largest carmaker by 21 per cent to 994,000 units per annum, the company stated in its draft red herring prospectus (DRHP), released on Saturday.

Moreover, HMIL said that it plans to launch four electric vehicles (EVs) in India, although it did not specify a timeline for the rollout.

The Creta EV, slated for launch in the fourth quarter of the current financial year (2024-25/FY25), will be the first of these four EVs, the company revealed. The South Korean carmaker had in April announced it would introduce five EVs in the Indian market by the end of this decade.

“We plan to develop the Chennai manufacturing plant as a hub for our EV and sport utility vehicle production. Further, with the addition of the Talegaon manufacturing plant, which is expected to start commercial operations partly in the second half of FY26, we are expanding our manufacturing capacity to boost production volume and accelerate economies of scale to match our supply capabilities in line with the growing demand in the domestic market,” the company stated in its DRHP.

The Chennai plant’s annual production capacity stood at 824,000 units as of March 31.

“We expect our annual production capacity across the Chennai and Talegaon plants in aggregate to increase to 994,000 units when the Talegaon plant is partly operational and to 1,074,000 units once the Talegaon plant is fully operational,” HMIL said, adding that it plans to keep its capacity utilisation above 90 per cent with a healthy mix between domestic sales and exports.

HMIL also intends to deepen its localised supplier network by adopting a localisation strategy for the Talegaon plant in India. HMIL disclosed that it purchased the Talegaon plant from General Motors in December last year for Rs 787.2 crore.

According to its DRHP, HMIL aims to divest a 17.5 per cent stake (142 million shares of a total of 812 million). Sources indicate that the company intends to raise roughly $3 billion (about Rs 25,000 crore) through this stake sale.

HMIL disclosed that it has signed a royalty agreement with its parent company, Hyundai Motor Corporation, under which it will remit 3.5 per cent of its quarterly sales revenue to the latter.

“We seek to calibrate our EV strategy and plan our EV timelines in line with market demands in India by launching the appropriate EV models within each price segment. We are following a transition strategy, starting with the launch of high-end, premium EVs and planning to transition towards the mass markets as the EV market and ecosystem scale up in India. In line with this, we aim to launch four EV models in the future, including the Creta EV in the last quarter of FY25," said HMIL.

Currently, HMIL sells two electric cars — the Ioniq 5 and Kona Electric — in India. However, both are in the premium range.

“To maximise the price competitiveness of our EV models, we intend to focus on securing local production capabilities for key parts such as cells, battery packs, power electronics, drivetrain, and building a localised EV supply chain. We leased a section of the Chennai manufacturing plant to Mobis for the assembly of EV batteries, which will be supplied to us, reducing our import costs for battery packs,” the company mentioned.

Further, HMIL intends to localise the EV supply chain through collaboration with both local and global EV power electronics vendors. Earlier this year, HMC and Kia Corporation announced their strategic collaboration with Exide Energy Solutions to facilitate localised battery production and supply in India.