With the opening of two showrooms – first at Bandra Kurla Complex, Mumbai, and then at Aero City, Delhi – in less than a month, the much famous Tesla brand has finally arrived in India. While the first roll-out on Indian streets is expected in September, Elon Musk’s firm will be opening more showrooms in other metros in the coming months. As it happens with a powerful global brand, which is being looked upon as a leader in its segment, Tesla’s entry has been well-covered by the media and there is enough buzz around the brand.
But the game for Musk’s company has just begun in India. The moot question is: will it really make a serious impact on the electric car segment, which seems to have reached a decisive point in its evolution journey? Domestic players like Tata and Mahindra are strongly positioned in the segment and those from the global arena like BYD and MG Motors are putting their best efforts to make a mark. Last year, the total sales of EV cars in India was 105,000 units, marking a growth of 12 per cent over previous calendar year’s figure. So, in that sense, the segment seems to have covered some distance and a new player will need to hit the ground running.
Senior representatives of India’s automobile sector will tell you that Tesla’s entry was expected early last year. It was supposed to be the key highlight of the grand debut show of Bharat Mobility Global Expo 2024.
According to the original plan, Musk was supposed to be present at the event announcing Tesla’s entry, which would have been a great photo op. But, then, the company probably got into a ‘who will blink first’ game with the government on the new EV policy proposal which, among other things, asked for an investment commitment of $500 million within a stipulated period to set up a domestic manufacturing shop. It entailed being charged a lower import duty till the domestic production began. The government did not blink and so Tesla has now arrived and will be relying on imports to sell its products to Indian auto enthusiasts.
Coming back to the point whether its entry will galvanise the EV car market and create more competition, the answer seems to be a definitive ‘no’. Importing its vehicles with about 70 per cent tax will make its offerings quite expensive. It has entered with Model Y in two variants: the standard Rear-Wheel Drive priced at about R61 lakh and the Long Range Rear Wheel Drive at Rs69 lakh. In the US, these models are sold at R32-25 lakh.
Considering its strong brand presence, undoubtedly it will find buyers among the rich and celebrities, but its business in the initial spell (at least the first couple of years) is unlikely to be extraordinary. The absence of a local manufacturing support system will put it in a disadvantageous position, as it will be labelled as a luxury EV model, which will be competing with the likes of the Mercedes-Benz EQB, BMW iX1 and Volvo EC40. And, this is a small fraction of the EV car market in the country currently.
The dominant players in the game – Tata, Mahindra and others – are offering products in the R13-30 lakh bracket and this segment has begun taking off. And they have also covered some miles in contributing to complete eco-system creation, including proliferation of charging stations and other infrastructure pieces.
Tesla obviously will not have much to do in the mainline action scene of the electric car vehicle stage but will be present as part of an exclusive club catering to the elite class for quite some time. Tesla’s arrival seems to be more symbolic in nature at this stage – like putting a foot in the door. It’s more like getting a ringside view of churnings in the world’s third largest auto market, which is projected to become a very fertile turf for electric vehicles (four-wheeler) business in a medium run.
Tesla, which generates 50 per cent of its revenue from the US and 20 per cent from China, has faced some reverses in the recent past in sales in markets, which have been its strongholds. And there is increasing competition particularly from the Chinese firms like BYD. With these equations in play, Tesla (it indeed has the ability to make long-term commitments) probably has decided to get as much close to India as possible and then strike when it comes across the right opportunities. In the process, the Indian EV sector has added a major global name to its portfolio.