Could Tesla Succeed In India?

there is an electric vehicle revolution sweeping the world but india is lagging behind india is hungry to join the ev race the thing that the country has to overcome is that the market for evs today is basically non-existent i think now the time has come you know we are finding consumers we are really interested in electric mobility solutions elon musk has said that tesla will enter india this year but it's not clear if that will actually happen there's a lot of news of tesla coming into the market for a long time now our opinion is that there's more hype than what the reality might offer on january 8 tesla took another step towards launching in india by registering tesla motors india and energy private limited in bengaluru by all accounts you seem to be setting up an i.t r d setup in bengaluru and that would be the starting point i think the minister is on record saying whatever it takes for tesla to equal its production costs in china we'll get it done but india is unlike the other countries where tesla has been successful the cars that sell in the mass market segments are relatively cheap products eighty percent of the cars sold in india market are priced at are under twelve thousand dollars it also lacks the infrastructure needed for widespread ev adoption there are obvious challenges ranging from you know the lack of charging infrastructure to driving lane consistencies and if tesla does eventually come to india it won't be easy it's not going to be like a china market for instance people like honda toyota ford a volkswagen being in the market for decades but they're having market shares of one to two percent would people rush to buy a tesla it is unlikely but it is trying to woo tesla to set up its production base in india and if tesla can establish a foothold as india transitions to electric it could be big for the company they certainly want to be positioned in markets though that are going to be high growth india looks like over the next 10 years it should be a relatively high growth market they have been talking about entering india for a long long time now and it's one of those markets that people are always trying to say yes there's a huge potential but then again you have everything boils down to profits india's car market is unlike any other in the world despite being one of the most populous countries it doesn't have very many cars the indian market overall it's a small car market we're talking about probably three and a half million like vehicles sold a year which compares with well over 25 million in china car ownership is still comparatively much lower when you compare it to a place like the united states and so a lot of people mostly rely on two wheelers and three wheelers to get to places it's dominated by motorcycles and mopeds which make up a majority of vehicle sales within the passenger vehicle category 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 i mean you've been reading about gm getting out of india ford has significantly reduced his operations india's auto industry has been growing it's now the fifth largest auto market in the world behind germany japan the us and china and it's expected to grow 11.3 from 2020 to 2027 but overall car ownership is uncommon only 22 out of every 1 000 indians have a passenger vehicle and the most popular are on the lower end it is a very cost-conscious market because it has so many cheaper alternatives available the best-selling brand in india is maruti they're experts making mini vehicles which are really cheap they cost around ten thousand dollars that's what makes up a bulk at least half of the indian market is cars in that price range and of that size the luxury segment is small but it's expected to grow at about six percent in the next five years you do have entrenched players like most of these fans bmw uh who are the number one and the number two players in the market but the luxury car market accounts for only one percent of the overall passenger vehicle market 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 vehicles sold in india the eevee market in india is just at the very nascent stage tata motors are going to be launching their ebv vehicles rt suzuki has plans to launch hybrids evs which they would they have a joint venture globally with toyota electric auto rickshaws have been around for quite some time now there are about 1.5 million electric autorick shows that are used by millions of indians every day tesla's entry into india is highly anticipated but its cars will be out of reach for most consumers there is virtually no premium market for electric vehicles in india and very little potential at least in the short term for teslas to sell in numbers in india you're not talking about the average middle-class person who's going to be buying a tesla in india it has adjusted its pricing to boost demand in china it has reduced the cost of the model 3 several times tesla will want to go as aggressively as possible in price i would look for them to position the model 3 or the model i may be imported as knock-down parts from china assembled in india and sold as exclusive premium products and when tesla does come to india it will be entering the ev market in its infancy charging infrastructure is still not up to where it is supposed to be and most of india's power grids are still coal powered and power outages especially during monsoon season for example are very common some of its signature features may not be available either a lot of technologies that tesla does have may not work in india things like autopilot and autonomous driving and those kind of features and auto change landing features but brand recognition in india is strong tesla definitely has a loyal brand following in india it's a small but a loyal brand following but will that turn into sales it's hard to say initially tesla has the kind of potential to actually double or triple the the premium car market in india some experts think importing into india may be the best move for tesla i think they probably would initially want to establish a presence in terms of the brand and having some visibility they would import the vehicle whether it's china or whether it's us my point is always that does that kind of investments to set up a factory offset all the import duties but import tariffs and china tensions could drive up the cost india has import tariffs stiff import tariffs and that can go up to as much as 50 to 100 percent and the cars would become even more expensive having an assembly plant in india is uh is one way around that and and they could actually import what we call knock-down kits so they actually make the most of the cheap labor force as the ev market grows tesla could then set up manufacturing within india they could start operating ckd factory similar to what mercedes benz and bmw have done at around 20 000 30 000 units per annum capacity plants they could manufacture in india for export to other asian markets and around the world government incentives and policies were used in china the u.s and europe to help jump-start the industry in those countries so india just cannot afford to go electric yet unless unless the indian government jumps in there and says okay we're going to fund this the government has over the past years announced some initiatives to incentivize battery producers to set up shop in india to give incentives to buy electric vehicles and wanting to incentivize the local car makers to produce more electric vehicles by imposing tariffs on imported ones from a tax point of view i think the evs are charged only five percent whereas all other passenger vehicles are charged at 28 but more needs to be done though the indian government does have some incentives that could benefit evs it is not a high priority for the government to provide massive incentives for the automotive sector always splitted against who they need to do more for other social programs you know what about unemployment what about you know food shortages and things like that which are more relevant to the country as a whole and it is unclear whether tesla is working with the government like it did in china it might be their interest to actually string that out a little bit the local governments on the ground are actually in a bit of a bidding war in terms of offering incentives tesla will be facing increasing competition several automakers have plans to introduce electric cars in india india's local manufacturers your tata motor your mahindra and mahindra they are already selling electric vehicles in the country most of these pens have started to enter the market with the eqc last year uh jaguar i-pace will be launching soon tata motors has already started with the nexon eb with the high cost associated with evs today tesla's biggest competition may still be cheaper gas-powered cars internal combustion engine vehicles are still very popular in india because they are comparatively cheaper and so there'd 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 the competitive advantage it needs it's very much possible you know that a tesla may develop a frugal solution you know in india india wants to embrace electric vehicles but they'll do it at very low price points like less than ten thousand dollars they'll invest in two wheeler and three wheeler electrics because that's where the market is and then eventually move up into cars and then up into premium cars given all the challenges that india does have we don't think that the ev market in india will take off in any fashion over the in the near future or even the longer term india's growth fell off a cliff last year because of the coronavirus pandemic and so the immediate priorities right now is to get that growth back on track maybe some of that can be incorporated into the electric vehicle space but that remains to be seen you

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Id: swd2iTan2t8

Length: 10min 51sec (651 seconds)

Published: Thu Mar 18 2021

Reddit Comments

[u/spiderspit]

When people say "India" in business circles the tonal inflection comes with the understanding that this is a huge market, second only to China. Selling in India is about selling to India's masses.

But Tesla's entry to India will be aimed at the small minority of Indians who can manage to own one. We're talking someone who is

1. Urban - because running a Tesla needs electrical infrastructure, charging networks and constant supply without long outages.
2. And obviously then narrow it down to people who can afford to and for whom it makes sense to own a 2/4 seater unless Tesla releases a modified Truck with side seating benches :D
   

Unless Tesla harnesses the power of the market and comes up with a game-changing auto-rickshaw, or rolls out the Power wall in Rural Markets (Loads of sunlight and power supply is erratic) we're just going to have another option for the big three.

[u/nazi-doraemon]

I suspect Tesla’s will be targeted towards people who buy Mercedes and BMWs. I see a ton of luxury cars in india predominantly driven exclusively in urban areas. Tesla won’t need to worry about setting up the charging infrastructure because people who will buy them are not the ones that would go to a public charging spot. They’ll likely have a few cars already and they’ll charge their Teslas at home.