TESLA PRODUCTION PLANT IN INDIA

• Tesla and China’s Contemporary Amperex Technology Co. Ltd

(CATL) are among the companies that have shown an initial
interest in the Indian government’s plan to build large
factories to make lithium-ion batteries at an investment of
about ₹50,000 crore.
• The robust global interest comes amid a strong push by the
government to make India a global manufacturing hub for
electric vehicles and their components.
• Aimed at securing India’s energy needs, the plan to set up
these 50-gigawatt hour (GWh) factories has been cleared by
EFC, with the final tender expected to be awarded by
February. Each gig watt hour (1,000 megawatt hours) of
battery capacity can power 1 million homes for an hour and
around 30,000 electric cars.
• Large batteries should be brought to the clean energy play to
help use infirm power such as wind and solar.
• We first need it on a large scale to cater to the internal
demand. All the top global manufacturers, including Tesla,
have evinced interest.
• Wherever such factories have come up, they have come up
with the government’s support. The focus of the tender is that
it should be made in India and value addition has to be
captured here.
Market Risk:
• It’s worth nothing that Tesla can’t simply set up a vehicle
assembly plant in India.
• India law require Tesla to a partner up with a local auto, under
which permits up 100% FDI.
• Macro analyst and will not engage in the debate over Tesla's
accounting practices or the possibility of bankruptcy, parking
lots full of cars or anything else that has been thoroughly
covered by the Tesla skeptics and firmly denied by the Tesla
bulls.
• Foreign automakers need to have a local factory in India to
reduce the extremely high import duties on foreign cars.
Competitive risk.
• The intensity of rivalry among other competitors has steadily
increased and is moderately high.
• Multiple companies have attempted to create an electric
smart car to compete with Tesla, but the bottom-line for many
of these companies is the fact that their vehicles will never be
a Tesla.
• Competitors have yet to design a car that looks beautiful and
futuristic with a performance that is comparable to a gasoline
powered car and as efficient as a Tesla.
• No other competitor has yet to replicate a similar network of
2,000 charging stations across the globe.
Project specific risk:
• When gas prices tumbled in 2014 and 2015, Tesla lost some of its
luster.
• After all, gasoline-powered cars compete with Tesla's products, and
declining gas prices make gasoline-powered cars more economically
attractive.
• Petroleum supplies are increasing and, at the same time, internal
combustion engines are more fuel-efficient.
• According to the Bureau of Transportation Statistics, the average
fuel efficiency of light-duty passenger cars in the United States
continues to improve.
• If Tesla is going to transition into a mainstream auto manufacturer
and generate consistent cash flow, it needs to sell a lot more cars.
Consumers are less likely to transition to electric cars if petroleum-
based fuels remain a far cheaper alternative.
 1. Tesla Cars Will Remain Too Expensive
Even with generous government incentives, such as tax breaks for
alternative technology, potential consumers of Tesla's Model S are
still faced with large price tags between $68,000 and $138,000 or
even more depending on options. Even Tesla's new lower cost
option, Model 3, is $45,000 before tax incentives and gas savings —
which is still a steep price for many people.
The cars are not only expensive for consumers to purchase, but
they're also costly for Tesla to make. Vertical Group analyst Gordon
Johnson estimated that in the first quarter of 2018, the company
lost about $14,000 on each of the Model 3 vehicles it sold
Increased Electric Vehicle Competition
Tesla is not the first company to create electric cars. Interestingly,
the first electric automobiles were probably created as early as
1834 by Thomas Davenport, but Tesla seems to be the most
successful, thus far.
• The battery supply chain is misunderstood and undercapitalized.
This will be the primary constraint to the rollout of electric vehicles.
• While there are enough mineral reserves, the mining industries
ability to ramp up production and chemical refining capacity is a
significant concern.
• Unlike lithium, there appear to be reserve shortages on the
horizon
for class one nickel and cobalt.
• China has accumulated a dominate share of ownership across the
supply chain. Concentration of supply is a risk for all battery users.
For governments and international organizations that have
decarbonizing goals and objectives, the concentration of supply is
also a risk.
• OEMs prioritize the surety of supply and quality. Several of the
largest battery producers in the world (principally Chinese firms) do
not currently meet the specification standards of Tier 1 western
OEMs.
• We currently see limited investment opportunities in upstream
lithium mining but several opportunities in lithium refining, and
throughout the supply chain with nickel and cobalt.
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