Elon Musk, through his unofficial statement-release platform, i.e Twitter, mentioned that he is making plans to enter the Indian automobile market, and it could happen as early as 2021. While there have been a number of occasions where Musk hinted at bringing Tesla to India, none of them have been quite conclusive. This time around, however, he made a more affirmative statement, while replying to a tweet. An account named Tesla India Club asked Musk what his plans for the future are with respect to bringing Tesla to India, and he replied “Next year, for sure”.
Next year for sure
— Elon Musk (@elonmusk) October 2, 2020
Musk’s links to India in the past
Back in 2018, through yet another tweet, Musk had talked about his expansion plans for the future. He said that by 2019, Tesla planned on expanding sales to China, eastern Europe, and Japan, while trying to establish a partial presence in India, Africa, and South America. The further plan would be to expand it further by 2020. This was not possible for the Californian automaker though.
Later in 2019, Tesla India Club (TIC) tried to clarify the scenario, by saying that vehicles over $40,000 have a 100% import duties, while for vehicles under $40,000, it is 60%. However, by having a small plant in India and reducing the imported parts to 10-15% only, Tesla can manage to break into the market. This would be facilitated by the fact that the government had just reduced the GST on electric vehicles from 12% to 5%, and that on chargers from 18% to 5%, said the TIC tweet. Musk replied to this by saying that Tesla normally starts selling cars in a new region first, and the money generated from those sales partly pays for the construction of the local factories. It also gives the company an understanding of the demand in that nation. However, with a lot of strict government regulations, this would not be possible, according to the Tesla CEO.
The plans to build a Tesla factory in India are nowhere in the picture right now, but there could be other ways for the EV powerhouse to enter the nation. As recently as August 2020, there were reports of a possible research facility of Tesla to be built in Bengaluru, Karnataka. Government officials had submitted a proposal to Tesla, and there had been two rounds of discussion regarding the same as well. As of now, however, there have been no further reports regarding the same.
Why the India move makes sense
India is a market that has been pretty much untapped when it comes to electric vehicles, especially in the passenger car segment. In 2019, hardly 3% of the total electric vehicles sold in India were passenger cars, with electric 2-wheelers and 3-wheelers dominating the sales. Electric buses have also been on the rise, while passenger cars have been in the backseat. A lot of this can be attributed to the lack of a dedicated EV manufacturer in the passenger car segment in the country. Most of the electric cars being driven on the roads come from combustion vehicle giants who are experimenting in electric mobility.
The entry of Tesla will change the scenery regarding electric cars in India a lot. Tesla is a well-established brand in electric mobility. If they do get a way to come into the country, they will enter with a robust plan with respect to a Supercharger network, a local factory, and overall sales too. A local factory does not seem to be a far-fetched idea either. After all, Tesla has plans for building a Gigafactory in Asia outside of China, which they will focus on after the Berlin Gigafactory and the second USA Gigafactory projects are done. Who’s to say that they will not try to get an Indian location for this upcoming Gigafactory?
Of course, it all depends on how Tesla manages to tackle the current government regulations, although PM Modi’s statement supporting the production of electric vehicles in India might be a small step forward. The Bengaluru research facility idea is a good one too. Bengaluru is a hotspot for research facilities of Mahindra Electric, Daimler, and Bosch, along with start-ups such as Ola Electric, Sun Mobility, and Ather. Karnataka is also the first state to come up with an electric vehicle policy in the country, with 11 other states later following suit. A report recently stated that the electric vehicle industry in India could be worth as much as Rs 50,000 crores by 2025. Tesla’s entry might just facilitate that prediction.
One thing that needs to be noted is that Musk has a habit of making a lot of promises and not following up on time. Most of Tesla’s timelines get pushed after some ambitious announcements, but it does not mean that they do not deliver results. Maybe Musk’s tweet could be related to the Bengaluru research facility, as that seems Tesla’s best bet currently to foray into the Indian market. Say what you will, however, the idea of Tesla entering the Indian automobile market is definitely an exciting prospect.