JSW Group and SAIC Motor Corp Join Forces for Electric Vehicles

It is words like "grand alliance,” "corporate partnerships," "billion-dollar valuations," and "ambitious rollout plans" that have been making headlines in the Indian automobile industry off late. The talk of the town is the news about Mumbai-based JSW Group and Shanghai's SAIC Motor Corp finalizing a strategic collaboration involving MG Motor India.

This alliance, directed towards the development and rollout of electric vehicles, has created quite a stir in the automobile landscape. The making of this grand alliance, the ownership structure, and the future road-map have generated widespread interest and intrigue.

The wholly-owned subsidiary of Chinese auto major SAIC, MG Motor India, has come under the spotlight for this cross border deal involving several months of negotiation. The estimated valuation of MG’s local business stands close to $1 billion.

Unless significant last-minute alterations arrive, the formal announcement is expected by Diwali this year. The plan is to rollout electric vehicles under the new corporate partnership by January 2024.

A private firm owned by Sajjan Jindal, the chairman of JSW Group, will initially hold 32-35% of the stakes in MG Motor India. SAIC will stay the leading shareholder with 51% ownership. Further, an Indian financial institution will own approximately 8% equity, whereas Indian dealers and local employees of MG will hold 6-7% stakes.

With the Chinese ownership below 49%, MG Motors will cease to be a Chinese company and will have an Indian majority representation in management and the board. A new brand identity is in the cards that will represent identities of both partners. In addition, a new CEO will be appointed for the venture to oversee the transition into an 'Indian company’.

With the losses mounting, the final valuation of MG Motors India is projected between Rs 7,000 – 8,000 crores, significantly lower than the original demand of $8-10 billion dollars. Earlier in May, Rajeev Chaba, the MG India managing director, confirmed the plans to induct an Indian partner with an investment of around Rs 5,000 crores this year.

Since debuting in India in 2019 with its British brand MG, SAIC has invested nearly Rs 5,000 crores in the country. The Chinese automaker owns a 1.26% market share in the passenger vehicle segment in India for FY23. However, the growth and expansion of MG Motors India have been sluggish for the past two years due to financial and other constraints.

JSW Group is also persistently vying for Ford’s manufacturing plant in Chennai, along with Mahindra and Mahindra. Industry analysts predict a heated competition between the new joint venture and Mahindra over this facility.

Amid the barriers and setbacks, MG Motors still managed to sell 48,866 units in FY23, marking a growth of 21% compared to FY22's sales. With the grand alliance, MG Motors now appears more poised to maneuver through the challenges and increase its market presence. However, only time will tell how the JSW-SAIC partnership shapes up and influences MG Motors' future trajectory in the Indian automobile industry.