On April 24, 2026, Horse Holdings Ltd. (HKEX: 0196) announced plans to establish a manufacturing facility in Gujarat, India, targeting the rapidly expanding compact car segment to capture projected annual demand growth of 8.5% through 2030, according to CEO Lena Vogel during a press briefing in Stuttgart. The move aims to localize production for Horse’s newly launched micro-EV platform, reducing reliance on Chinese component imports and positioning the company to compete with domestic rivals like Tata Motors (NSE: TATAMOTORS) and Maruti Suzuki (NSE: MARUTI) in a market expected to reach 4.2 million units annually by 2028. With Horse’s current revenue of €18.4 billion and EBITDA margin of 12.3% as reported in its 2025 annual report, the India initiative represents a strategic pivot to mitigate slowing European EV demand while leveraging India’s production-linked incentive (PLI) scheme offering up to 18% subsidies on locally manufactured electric vehicles.
How Horse’s India Play Reshapes Global EV Supply Chains
Horse’s Gujarat plant, slated for commissioning by Q1 2028 with an initial capacity of 150,000 units annually, will source 65% of its battery cells from LG Energy Solution’s (KRX: 373220) new Tamil Nadu facility under a 2025 off-take agreement, reducing logistics costs by an estimated 22% compared to current China-to-Europe routes. This localization strategy directly addresses margin pressure from Horse’s declining European EV sales, which fell 14.2% YoY in Q1 2026 per the company’s interim report, while simultaneously creating a hedge against potential EU carbon border adjustment mechanism (CBAM) tariffs on imported batteries. The initiative aligns with India’s FAME-III policy targeting 30% EV penetration by 2030, a shift that could displace €11 billion in annual internal combustion engine imports according to NITI Aayog estimates.
Competitive Ripple Effects Across Automotive Indices
Following the announcement, Tata Motors’ shares declined 3.1% on the NSE amid concerns over intensified competition in the sub-€10,000 EV segment, where the Tata Tiago EV currently holds 38% market share. Conversely, Maruti Suzuki gained 1.8% as investors interpreted Horse’s focus on pure electric models as less threatening to its dominant hybrid portfolio, which accounts for 62% of its FY25 revenue. Analysts at Bernstein note that Horse’s entry could compress average selling prices in India’s EV market by 9-12% by 2029, potentially accelerating adoption but pressuring margins for incumbent players reliant on premiumization strategies.
Financial Mechanics Behind the Gujarat Investment
Horse will allocate €850 million toward the Gujarat project—equivalent to 4.6% of its 2025 revenue—financed through a combination of internal cash flows (€500 million) and a 7-year syndicated loan facility arranged by HSBC (HKEX: 0005) at SOFR+180 bps. The investment implies a payback period of 6.2 years based on conservative EBITDA assumptions of 10.5% for the India operation, slightly below Horse’s corporate average due to initial localization inefficiencies. Crucially, the project qualifies for India’s PLI scheme, which could yield up to €153 million in cumulative subsidies over five years if production targets are met, effectively reducing the net capital outlay to €697 million and improving the adjusted payback to 5.1 years.
| Metric | Horse Holdings (Consolidated) | India Operation (Projected) |
|---|---|---|
| Annual Revenue | €18.4B (2025) | €1.2B (by FY29) |
| EBITDA Margin | 12.3% | 10.5% |
| Capex Allocation | €850M (Gujarat) | 100% of project |
| Payback Period | N/A | 5.1-6.2 years |
| Policy Support | EU Green Deal subsidies | India PLI (up to 18%) |
Expert Perspectives on Emerging Market EV Dynamics
“Horse’s India move is less about capturing domestic share and more about de-risking its global supply chain. By localizing battery production through LGES, they’re building a firewall against both Chinese export controls and potential EU reciprocity tariffs—This represents supply chain arbitrage at its most sophisticated.”
“The real test will be whether Horse can adapt its European-designed micro-platform to Indian road conditions and charging infrastructure realities. Early localization failures by Hyundai and Kia in India show that platform portability isn’t guaranteed—success here hinges on engineering flexibility, not just subsidy chasing.”
Horse’s Gujarat investment reflects a broader trend where traditional automakers are using emerging market EV production not just for sales growth but as a strategic lever to restructure global value chains amid rising trade fragmentation. While the initiative addresses immediate margin pressures from Europe’s softening EV demand, its long-term success will depend on Horse’s ability to navigate India’s complex tariff structure—particularly the impending sunset of FAME-III subsidies in 2027—and achieve sufficient scale to justify the €850 million outlay. For investors, the key metric to watch will be the India operation’s contribution to group EBITDA by 2030, with analysts consensus estimating a 6.8% uplift if localization targets are met, potentially re-rating the stock toward a forward PE of 14.5x from current 16.2x levels.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
