Elon Musk tweeted "as promised" in response to a report on a Tesla-focused blog that the automaker has been in talks with several Indian states to open an office, showrooms, a R&D center - and possibly a factory.
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| Elon Musk |
Elon Musk confirmed that Tesla Inc. It will enter India last week, to the delight of fans, some of whom bought electric cars years ago. But it could prove to be the most difficult market for the company to break into yet.
The world's richest man tweeted on January 13 "as promised" in response to a report on a blog focused on Tesla that the automaker is in talks with several Indian states to open an office, showrooms, a research and development center - and possibly a factory.
Tesla Is Preparing for a Robust Entry into India 🇮🇳 , a Multi-Billion Dollar Markethttps://t.co/P2J4YAoy5b
— Tesmanian.com (@Tesmanian_com) January 13, 2021
"It's really happening," said Nikhil Choudhury, a 20-year-old student at Delhi University who helped found the Tesla Fan Club in early 2019, adding that he was "crazy" when he heard the news.
Aaron Bhatt, 34, a manager of a company in Bengaluru, the city formerly known as Bangalore, was likewise happy, saying that there was finally a possibility that he would be able to drive the Tesla Model 3 he ordered in 2016.
Despite all the hype, Tesla's invasion of India is far from a done deal. The company is in discussions with state officials but has yet to make a decision on an Indian base, according to a Tesmanian blog that sparked Musk's response, which came after months of unproven speculation in the local media. A Tesla representative in Beijing declined to comment.
Although India is the third largest economy in Asia and home to an emerging middle class, it has yet to introduce the welcome mat for electric cars, unlike its neighbor China, where Tesla has set up its first factory outside the US and now dominates electric vehicle sales. .
Electric cars account for about 5% of annual auto sales in China, according to Bloomberg New Energy Finance, compared to less than 1% in India. Most market observers expect China to overtake other countries when it comes to electric vehicles in the near term, thanks to generous government subsidies, a craving for environmentally friendly vehicles among the country's youth, a high mobile population and a robust shipping network.
According to the International Energy Agency, about 60% of the world's slow and fast charging sites are in China. UBS Group AG analysts wrote in a report last month as Chinese automakers roll out competitive electric vehicle models and develop a diversified ecosystem, the country is "heading towards disrupting the current global auto industry landscape".
India has been taking steps, but they are not on the same scale.
In 2015, it launched a faster adoption and manufacturing scheme for hybrid and EV (FAME) vehicles, with a 9 billion rupee ($ 123 million) commitment in subsidies covering everything from electric tricycles to buses, according to the International Energy Agency. The second-generation FAME program introduced in 2019 was even bigger, at Rs 100 billion to encourage the purchase of electric vehicles and build charging infrastructure.
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India has also reduced the GST on electric vehicles to 5% from 12%, as of August 2019, which is well below the 28% duty charged on other cars, which has drawn criticism from companies such as Toyota Motor Corp.
In China, by contrast, where the Chinese state utility company has committed to spending 2.7 billion yuan ($ 416 million) on charging stations in 2020 alone. In another sign of China's much greater commitment, state-owned China Southern Power Grid said it plans to invest 25.1 billion yuan in shipping infrastructure over four years. This expense comes after several years of heavily subsidizing consumer purchases of electric vehicles to start the market.
The cost will also be a major stumbling block.
India's FAME programs won't do much to help lower the price for potential Tesla customers, given that the upper limit for an EV to qualify for benefits is Rs 1.5 million. It will cost Teslas more than that, and therefore not qualify, according to BNEF analyst Allen Tom Abraham.
The entry-level Tesla Model 3 in China starts at 265,740 yuan, or about $ 40,960, while the Shanghai Model Y SUV, which can span nearly 600 kilometers (373 miles) on a single charge, costs From 339,900 yuan. With the export expense on top of that, the sticker on the Tesla retail car in India will put it out of reach for most drivers.
About 75% of all Indian car sales occur in the $ 10,000 range and under the arc, about half the average price in China and only 25% of the average in the US, meaning that even the most affordable Tesla car is likely to attract around Only 1% of Singapore-based Abraham said. “The quantities that can be expected in a market like India will be really small,” he said.
Sweeteners industry
However, the Indian electric vehicle market is growing and could reach nearly $ 206 billion in value in the next decade, according to a study by the CEEW Energy Finance Center, which indicated that an investment of more than $ 180 billion would be required by 2030.
And in a large country like India, a product with small market share could be beneficial for Tesla, especially given the strong brand awareness of the company among wealthy and eco-conscious Indians. "Education about solar energy and electric vehicles is essential," Choudhury wrote on the Tesla India fan club website. "We have to educate people about sustainable energy.
According to Rajiv Singh, Partner and Automotive Leader at Deloitte India, Tesla is already a household name - “there is a pull factor in the brand’s perspective” - and the luxury segment in India is also set to grow about 15% more than Deloitte expects five to seven years. Next, double the total market.
While it is unclear how seriously Musk contemplates the possibility of one day making cars in India, the government is said to be trying to woo big-name manufacturers, and Tesla will be the final catch - as has been the case for China.
Prime Minister Narendra Modi's administration plans to provide about 1.7 trillion rupees in incentives to lure global companies to set up manufacturing, people familiar with the matter said in September. The nation has had some success, with about twenty companies including Samsung Electronics Co. And Hon Hai Precision Industry Co., Ltd. , Known as Foxconn and Wistron Corp.
Even as enthusiastic as Bhatt - the company director in Bengaluru who is currently driving the Hyundai Kona EV - is realistic about the challenges.
"Until the local meeting factory is established, it will be a specialized product," he said.
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