COULD TESLA SUCCEED IN INDIA?

Step towards launching TESLA in India

There is an electric vehicle revolution sweeping the world but India is lagging behind. India is
hungry to join the EV race. Elon musk has said that tesla will enter India this year but its not
clear that it would actually happen. On January 8, TESLA took another step towards launching
in India by registering TESLA motors India and energy private limited in Bengaluru.

But India is unlike other countries where tesla has been successful. Eighty percent of the cars
sold in Indian market are priced under twelve thousand dollars. And if TESLA does eventually
come to India it won’t be easy. It is not going to be like a china market.

Car ownership is still comparatively much lower when you compare to a place like the UNITED
STATES. And so a lot of people rely on two wheelers and three wheelers to get to places. It is
dominated by motorcycles and mopeds which make up a majority of vehicle sales within the
passenger vehicle category.

Leading competitors for TESLA

The market is mostly controlled by a few big players. MARUTI SUZUKI which is owned by
Suzuki is the number one player in India. They control something like 50% of the market share
and everyone has found it tough. We have been reading about GM getting out of India. Ford has
significantly reduced his operations.

India’s auto industry has been growing. It is now the fifth largest auto market in the world
behind Germany, Japan, US and China. And it is expected to grow 11.3% from 2020 to 2027.

But overall car ownership is uncommon. Only 22 out of every 1000 Indians have a passenger
vehicle. It is a very cost-conscious market because it has a more cheaper alternatives available.
The best-selling brand in India is MARUTI. They are experts making mini vehicles which are
really cheap the cost around ten thousand dollars. There are not many electric vehicles but that is
starting to change. Electric cars are still a very minuscule portion of the total number of the
vehicles sold in India.
Upcoming challenges that TESLA has to face

 Tesla’s entry into India is highly anticipated but its cars will be out of reach for most
consumers. In China TESLA has reduced the cost of MODEL THREE several times.
Tesla will want to go as aggressively as possible in price.
 Most of INDIA’s power grids are coal powered and power outages especially during
monsoon season are very common.
 Some of TESLA’s signature feature may not be available either. A lot of technologies
that TESLA does have may not work in India for example things like autopilot,
autonomous driving and auto landing feature.
 Internal combustion engine vehicles are still very popular in India because they are
comparatively cheaper and so there would be competition from these local producers as
well as the foreign imported cars. But if tesla were to build a more affordable EV it
could give TESLA a competitive advantage it needs
 Several automakers have plans to introduce electric cars in India. India’s local
manufactures like TATA motors, MAHINDRA and MAHINDRA, they are already
selling electric vehicles in the country. Tata motors have already started with the
NEXON EV. With the high cost associated with the EVs today TESLA’s biggest
competition may still be cheaper, gas powered cars.

But brand recognition in India is strong. It is a small but a loyal brand following but will that
turn into sales? it is hard to say initially.

Some experts think importing into India may be the best move for Tesla. But the import tariffs
could drive up the cost. India has import tariffs that can go up to as much as 50 to 100 % and the
cars would become even more expensive.

India wants to embrace electric vehicles but they will do it at very low price points like less than
ten thousand dollars. They will invest in two-wheeler and three-wheeler electrics because that’s
where the market is and then eventually move up to cars and then up into premium cars. India’s
growth fell off a cliff last year because of the corona virus pandemic and so the immediate
priorities right now is to get that growth back on track. May be some of that can be incorporated
into the electric vehicle space.