Chinese carmaker SAIC Motor is preparing to significantly reduce its 49 percent stake in JSW MG Motor India and pause further investments, according to a Reuters report. Despite a recent India-China meeting, progress on trade has been limited, and tensions continue to impact the auto sector. While the move doesn’t signal a full exit, it underscores the challenges Chinese automakers face in India.
- SAIC plans to cut its stake but will keep supplying technology and products
- JSW seeks a majority stake in the JV, but valuation is still pending
- The move comes amid China’s investment curbs and Tesla’s entry
The decision comes against the backdrop of India’s 2020 restrictions on foreign direct investment from neighbouring countries, rules widely seen as aimed at Chinese firms following border tensions that year. To work around these curbs, SAIC tied up with Indian conglomerate JSW Group, paving the way for MG Motor’s expansion in what is now the world’s third-largest car market.
Despite a recent meeting between Indian and Chinese leaders, progress on easing trade barriers has been slow. For example, Indian carmakers are still waiting for approvals from Beijing to import rare-earth materials crucial for EV manufacturing.
Valuation standoff with JSW
The Reuters report, citing sources, said SAIC plans to dilute its shareholding “substantially” but continue supplying technology and products. JSW has offered to buy most of SAIC’s shares to become the majority shareholder, though both sides have yet to agree on valuation.
The strains aren’t limited to politics. JSW is also in advanced talks with Chery Automobile for a technology partnership to build cars under its own brand in India, something that has reportedly caused unease for SAIC.
SAIC’s journey in India
SAIC entered India in 2019 with the MG Motor brand, investing over $650 million and taking over General Motors’s former Gujarat facility with an annual capacity of 1,20,000 units. However, its proposal to invest further in EVs under a government-linked incentive programme was turned down in 2020.
Last year, SAIC sold a majority of its holdings in its Indian arm to local investors, with JSW buying a 35 percent stake for around $300 million, valuing MG Motor India at about $1.2 billion. The proceeds went directly to SAIC instead of the Indian unit. Since then, JSW MG Motor has filed a $240 million EV investment plan, which is still awaiting government approval.
MG’s growth and the road ahead
Despite hurdles and losses, MG Motor India’s sales have grown from 16,500 units in 2019 to over 61,000 in 2024, and it has become the country’s second-largest EV maker after Tata Motors. The challenge now will be maintaining momentum with the entry of global heavyweight Tesla.
SAIC’s reduced role could give JSW greater control over MG’s future direction in India, but it also raises fresh questions about technology access, valuation and how the joint venture will navigate India’s increasingly competitive EV space.