This Is Why Tesla Probably Won’t Come To India

Now, we know that India is one of the largest markets for almost any commodity you can think of, industry leaders know it too and that’s why they are most keen on setting up operations in India. One company however has been on everyone’s mind simply because of how breathtakingly amazing their cars are!

When it comes to Elon Musk bringing Tesla to India, the question has been whether he will or will not. Every few months or probably more there is someone or the other questioning Musk about Tesla’s India plans or requesting him to bring Tesla to India.

Tesla’s CEO has made numerous clues, and the business has apparently begun operations in India as well. However, there is no clear timeline for when Tesla automobiles will arrive in India. Despite the lack of a date for Tesla’s arrival in India, Musk has addressed why the company has yet to arrive in the country.

Tesla’s Biggest Market Potential Yet

If there was one clear benefit from last year’s protracted slowdowns in most big Indian cities, it would be this: clear blue sky, less sound pollution, and lower emissions into our fragile ecology and thus and there’s no doubt that the future is electric. Oil-powered vehicles will, sooner or later, become obsolete, and the roads will be dominated by, arguably, environmentally friendly, less-noisy electric automobiles.

In a sense, it showed us how India could appear if it were cleaned up, which could happen in the future with the adoption of electric vehicles. This puts the spotlight on Tesla, the world’s most well-known electric vehicle manufacturer, which has recently increased its focus and made pronouncements about entering India.

Despite its expertise in new-age automobiles and the cult of personality leadership that Tesla CEO Elon Musk wields, the subcontinent, as several American automakers (Harley-Davidson, GM, Ford) have discovered, is one of the world’s most difficult car markets to enter.

What will it take for Tesla to become plug-and-play operations in India? According to industry experts, it’s a combination of strategy, getting the price right, timing, the appropriate personnel, and, most importantly, patience.

But the question is whether has India, made the required preparations to embrace the electric future?

India Is Getting EV Ready

From McDonald’s McAloo Tikki and Chicken burgers to full-crusted pizzas at local eateries, foreign firms entering India have only had two options: dance to the beat of Indian traditions or leave.
Any tyre advertising will offer additional grip; they’re designed to keep you safe on India’s potholed, congested, rowdy roads, which promise to surprise you every mile of the trip. Even commercials for oil engines have gone down this road. Above all, Tesla will need to undergo considerable Indianization and establish its usefulness on India’s bumpy roads. To thrive in India, the electric vehicle company will have to turn its luxury cars into robust monsters or risk repeating the fate of previous overseas hits that were ignored.

Take the Fiat Uno, a worldwide successful automobile that failed in India due to its low floor design, which was unsuitable for our bumpy roads. When I was younger, my family owned the automobile; it was a tough-looking machine with a silencer that would slam into every other speed-breaker on the road. Nobody wanted a threat like this. Fiat’s general services are also to a fault, but that’s a topic for another day.

Take, for example, the more well-known and recent case of Harley Davidson, the ultimate icon of machismo, which was deemed insufficiently virulent in India. The Indian roads will never allow you to fully appreciate such high-end motorcycles. Harley Davidson sold only 10,000 two-wheeler units in India last year, out of a total of 20 million. As a result, their operations in this area were shut down. The brand’s signature “open road” feeling was simply unavailable in India.

Tesla Autopilot: A Meme For Indian Roads

India Roads Meanwhile Tesla's current autopilot meme -

Apart from its ground-breaking performance and excellent range, Tesla’s smart Autopilot technology is standard equipment in all of its electric vehicles and is one of the company’s primary selling points. Although active driver supervision is encouraged, the system consists of a comprehensive suite of advanced driving assistance technologies (ADAS) that make the car autonomous. Radar-based assistance systems, on the other hand, confront legal uncertainty in India, where no frequency bands have been allocated for carmakers to begin testing these technologies.

Finally, Tesla Autopilot will struggle to function normally due to inadequate road infrastructure, which includes a lack of consistency in signboards, pedestrian behaviour, traffic patterns, and road markings.
On the plus side, things appear to be getting better with time. The GST on electric vehicles has been decreased from 12% to 5%, while the GST on batteries has been reduced from 18% to 5%. The government has set aside ₹10,000 crores for the FAME 2 scheme, which will make hybrids and electric vehicles more affordable. Manufacturers are now taking advantage of the 2500-unit homologation-free import path for low-volume vehicles. Let’s hope that the government takes more steps like these to make this far-fetched ideal a reality. And who knows, if that happens, we might see a made-in-India Tesla EV tied to SpaceX’s rocket launch into orbit.

Tesla’s OEM Problem

Lithium, cobalt, and nickel are important battery components that are hard to come by in India. Another important component is charging infrastructure, which necessitates extensive collaboration between local governments and automobile manufacturers. That’s why, after Nevada, Tesla decided to build its second Gigafactory in Shanghai. China is the world’s largest EV market, with vast battery manufacturing capabilities, thus it made sense for Tesla to invest in Shanghai rather than India. For Tesla to contemplate developing even a micro-factory, the government must relax land and labour rules and promote local raw material production.

Also Read: We Are Running Out of Silicon and You Should Be Concerned

Giga India Factory by 2025?

Tesla’s entrance should come as no surprise. According to recent research, India’s electric car market will be worth ₹ 50,000 crores by 2025.
Many large corporations make the mistake of entering India only for the sake of wooing the potentially massive market, ignoring the country’s obvious infrastructure limitations.

India will not buy your product if it is impracticable for Indians, regardless of how technologically better it is.

For a government aiming to have 30% of passenger vehicles sold in India be green by 2030, a goal that was ambitiously and delusory set at 100% earlier, the rate of growth and reforms do not appear to be matching the timeframe established. This leads us to the elephant in the room: our systems’ ‘elephant pace’ of operation. Despite the attractiveness of India’s market volume, most multinational corporations lack the patience to deal with it.

In India, there is less than 500 electric vehicle charging stations, despite the fact that the current demand is estimated to be approximately 2,600. To fill the shortfall, some electric vehicle-based cab businesses have built up their own charging stations in various areas. China, on the other hand, has over 5 lakh charging outlets.

It’s not like the Indian government isn’t considering overhauling the country’s electric vehicle landscape. The issue is that it appears to be doing nothing but contemplating. The government is considering putting 69,000 charging kiosks at gas stations across the country, according to recent reports. You might be able to use the power of your ‘thoughts’ to charge your Tesla at gas stations if you keep going at this rate. It’s inexpensive to talk. Every day in this country, lofty promises are made. The reality of India in 2021 is as far apart as possible from the promise of 2021 that we grew up hearing.

India’s Upcoming EV Era

It’s not as if the administration hasn’t attempted to boost demand. In the 2019 budget, an income tax exemption of up to ₹ 1.5 lakh was established for the purchase of an electric car.

However, high ownership costs, low resale value, and a lack of suitable infrastructure, along with the poor battery performance of currently available vehicles, have resulted in abysmally low demand for electric vehicles in India. Between April and November of this year, just 1,309 electric automobiles were sold. According to a Bloomberg report, we barely sold a little more than 8,000 devices in the last six years. In two days, China exports more than that.

Your Teslas may also be pretty costly. The government has allocated almost ₹ 11,000 crores over three years under FAME (Faster Adoption and Manufacturing of (Hybrid and Electric Vehicles) to increase local manufacturing of EVs and to build up charging stations. At the same time, the government has raised the customs charge on Completely Built Units (CBUs), which Tesla is likely to use to enter India, from 25% to 40%.

India is without a doubt a promising market for electric automobiles. But unless we do a lot more to make buying, owning, and driving electric cars a logical and practical choice, only a few wealthy people will buy Tesla’s for their garages, and the country will never see a true electric revolution.

India’s Absurd Import Taxes

This is one of Tesla’s most serious issues. Currently, India slaps a 100% import tax on automobiles costing more than $40,000 ( ₹ 30 lakh) including insurance and shipping costs, while cars costing less than $40,000 are subject to a 60% import tax.

Musk has also chastised the government’s policy for electric vehicles (EV), claiming that they are subject to the same import duties as gasoline and diesel automobiles.

Without a reduction in import duties, Tesla will remain premium, but not ultra-premium, in the Indian market.

Musk recently stated that he wants to launch automobiles in India, but that the country’s import tariffs on electric vehicles are “by far the highest in the world.” 

Tesla CEO’s Response To Bringing Tesla Cars to India

Tesla is also “hopeful” for “at least a temporary tariff relief for electric vehicles,” according to Musk. That would be extremely helpful.” He is clearly placing the ball in the court of India’s government.

This isn’t the first time Tesla’s CEO has expressed anxiety about import tariffs.

The electric vehicle manufacturer has petitioned the government to reduce the import tariff on electric vehicles from 100% to 40%. Tesla also intends to open a manufacturing facility in Karnataka once it achieves success with imported vehicles.

The premium car market currently accounts for around 7% of the total car market.

Many years ago, luxury brands such as Mercedes and BMW entered the Indian market. Mercedes began assembling AMG vehicles last year in order to make them more affordable. Mercedes-Benz will introduce its electric car as a complete import (EQC model) in 2020, with a starting price of $136,000 (about ₹ 1.01 crore), and Audi will launch three electric SUVs with a starting price of $133,000 (roughly ₹ 1.01 crore) (around ₹ 99.99 lakh).

The Tesla Dream

If and when Tesla does enter the Indian market, Musk appears to have a “larger” plan. Another Twitter user inquired about the possibility of locally produced autos in the Indian market. “If Tesla is able to succeed with imported automobiles, then a plant in India is extremely likely,” Musk said in response to the query.
While this may be welcome news to the Indian authorities, it appears that Tesla still has a long way to go in the country.

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Charu Gyanchandani
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