Hyundai Motor Company this week announced plans to invest INR200bn (US$2.4bn) to strengthen its operations in India, the world’s third largest vehicle market after China and the US.

The automaker’s local subsidiary, Hyundai Motor India (HMIL), plans to build an assembly plant for electric vehicle (EV) battery packs in Chennai, Tamil Nadu state, where its existing vehicle manufacturing operations are based. The funds will also be invested in existing factories for the production of EV models as well as new internal combustion engine (ICE) vehicles for sale locally and for export.

HMIL managing director Kim Un-soo said: “The long term investments will help enhance our manufacturing capacity, enabling us to make the best EVs and ICE vehicles in Tamil Nadu for the rest of the world.”

India is one of the fastest-growing automotive markets worldwide, with 4.7m new vehicles sold last year, surpassing Japan. Hyundai is India’s second largest carmaker, behind Maruti Suzuki, with a market share of around 15%. The company has two vehicle plants in Chennai with combined capacity for 775,000 vehicles per year. The investment is expected to increase this to 850,000.

Earlier this year, Hyundai agreed to acquire General Motors’ redundant vehicle assembly plant in Talegaon, Maharashtra state, to add further capacity in the country. Before its closure the Talegon facility had capacity for 130,000 vehicles per year at full swing.

EVs accounted for 1% of total vehicle sales last year but are expected to grow significantly by the end of the decade. The government wants EVs to account for 30% of passenger vehicle sales by 2030 and is offering production and sales incentives.

To encourage EV sales, HMIL said it also plans to install a network of 100 charging stations across Tamil Nadu in the next few years.