Tesla Inc. and India has always been on a roller coaster ride .Let us learn why.
Tesla Inc. is gearing up for its market in India since two years but it is likely to cater to the rich class only. India still does not have potential buyers for this environmentally conscious EV market.
Tesla sells its models for almost double the price in the U.S. market. India has yet not seen growth in its EV market. Smaller competency in this luxury segment has led buyers to show interests in other competitors of Tesla like Mercedes Benz and Jaguar Land Rover.
Mercedes Benz launched its EV in October while Tata Motors is also planning to launch its EV.
Besides that India’s poor road infrastructure is also one of the reasons for the self -driving Tesla’s inadequate market .Many of Tesla’s high technology features like automatic lane changing, self detecting of obstacles , automatic brakes would be difficult to put up with the congested Indian roads.
The second reason behind Tesla’s inferior market is less demand for EVs. Here, most of the people are not so environmentally concerned. The demand for electric vehicles is less in India due to their high premium. Moreover, lack of local production results in high prices of its components like batteries .Since India is largely dependent on fuel driven vehicles , there is a lack of charging infrastructure for these EVs .India’s price conscious market refrains buyers for buying the high cost electric vehicles.
One of the most important factor that constrains Tesla’s market to expand in India is high import duties .Although, India has been taking measures to boost EV sales, Indian government still levies high import tariffs on electric vehicles .It imposes 60 percent import duties on electric vehicles below $40,000 and 100 percent on electric vehicles priced above $40,000. In India, Tesla’s starting price ranges around $43,000 which means a 100 percent import duty is being levied on Tesla’s EVs .India is considered among one of the highest import duty levying country on electric vehicles .These high taxes hampers the company’s automobile sales.
Recently ,Tesla’s chief executive Elon Musk raised his concern against these high import taxes. He also urged for a meet with Prime Minister Narendra Modi.
According to a report, India’s EV market appeals to only one percent potential Indian buyers .India has always had a fuel-dominated market for vehicles which has drastically reduced any chances for growth in its electric vehicle sector. According to the Bloomberg report, 75 percent of Indian auto sales occur within the price range of $10,000 while the cost of initial level Tesla’s Model 3 starts at $41,000 excluding the export charges which make it beyond the reach of middle- class Indians .The other two models Model X and Model Y range INR 2 crore and INR 1.5 crore respectively. Hence, Tesla cannot be considered as affordable cars for most of the price concerned Indians.
Although many of Tesla’s fans are jubilant about Tesla’s entry into the Indian markets, yet it is a challenge for the company because of its limited demand.
India launched the Faster Adoption and Development of Hybrid and Electronic Vehicle (FAME) in 2015 and 2019 including a 900 crore and 10,000 crore pledge respectively. It was aimed to provide subsidies for electric vehicles and enabling people to buy electric supplies and construction of charging infrastructure. However, the high tax rates deter the demand for EVs. The low economic sales lead multi national companies to pull out from the Indian markets.
It will take at least 2-3 years for good sales in EVS and a better market for Tesla in India.
