HYUNDAI Motor and Kia on Monday (Apr 8) signed a memorandum of understanding with India’s Exide Energy Solutions to supply batteries for their electric vehicles in a bid to boost competitiveness in the world’s No 3 auto market.

The South Korean auto duo said in a statement that the partnership with Exide Energy, a unit of Exide Industries, aims to localise their EV battery production in India, specifically focusing on lithium-iron-phosphate cells.

Hyundai and Kia are set to expand in India – one of its their four biggest revenue generating markets along with the United States, South Korea and Western Europe.

Hyundai has said it plans to invest about US$2.40 billion for 10 years from 2023 for the Indian market, including for the launch of six EV models by 2028 and charging stations.

Kia plans to introduce locally optimised small-sized EVs starting 2025, Wednesday’s statement said.

Exide Energy is aiming to produce EV battery cells at the end of this year.

“India’s average manufacturing labour cost is estimated to be about one-fourth of labour cost in China, and the country’s massive lithium mines would help automakers that plan to make EVs in the country to better source necessary battery materials,” said Shin Yoon-chul, an analyst at Kiwoom Securities.

Shares of Hyundai Motor and Kia closed 3.1 per cent and 3.3 per cent higher, respectively, versus the benchmark Kospi’s 0.1 per cent rise.

Shares of Exide Industries rallied as much as 15 per cent to a record high.