BYD eyes a SKD assembly factory in India as EV orders start piling up

BYD is reassessing how it operates in India after demand for its electric vehicles surged beyond what current import rules comfortably allow. People familiar with the matter say the Chinese automaker is examining ways to increase supply, including assembling vehicles locally, as dealer order books continue to swell.

The discussions come at a time when BYD’s India operations are facing pressure from import limits that restrict the number of fully built vehicles it can bring in each year, even as sales momentum gathers pace.

Semi-assembly seen as viable middle ground

India had earlier turned down BYD’s proposal to set up a full manufacturing facility, but the company is now understood to be considering assembling vehicles from semi-knocked-down kits. This approach would allow BYD to avoid some of the regulatory complexity associated with full-scale manufacturing while also lowering duties.

Sources said the automaker is simultaneously working on securing local safety and regulatory approvals for additional models, a step that could help it operate within India’s import framework more efficiently.

Import rules collide with sales growth

BYD sold roughly 5,500 vehicles in India last year, an increase of about 88 per cent compared to the previous year. That growth has stretched the company’s ability to comply with rules that cap imports of each fully built model at 2,500 units.

Most of BYD’s inventory for the December quarter has already been sold, according to people familiar with the situation, leaving dealers with limited stock and long waiting periods for customers.

Pricing keeps BYD competitive

Despite import duties that can reach 110 per cent, BYD has managed to price its vehicles aggressively. The Atto 3 electric SUV, starting at ₹25 lakh, sits at the upper end of the mass-market EV segment, competing with models from Tata Motors and Mahindra & Mahindra.

Higher up the range, the Sealion 7, priced between ₹49 lakh and ₹55 lakh, sold around 2,200 units last year and remains cheaper than Tesla’s Model Y, which starts at ₹60 lakh in India. Tesla, meanwhile, has reportedly been resorting to discounts to stimulate demand under the same tariff regime.

Lower duties drive assembly talks

Switching to semi-knocked-down assembly could reduce import duties to about 30 per cent, compared with around 70 per cent for fully built vehicles. BYD has raised concerns with Indian auto regulators that current import limits could slow its expansion plans.

Any manufacturing decision is expected to follow visits by senior BYD executives, although some planned trips by top management were delayed last year.

India part of BYD’s global push

The renewed focus on India also reflects BYD’s broader effort to reduce reliance on its home market, where EV growth has begun to moderate amid subsidy rollbacks and fierce competition. The automaker is targeting a sharp rise in overseas deliveries this year.

While diplomatic engagement between India and China has improved marginally, policy support for Chinese automakers in India remains uneven. A BYD spokesperson did not respond to queries on the company’s India strategy.

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