Problems that Tesla may face in India

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Elon Musk’s electric vehicle manufacturer Tesla sets to start selling its base model in India in the future. Many of its fans in India were excited about Tesla’s entry; capturing the market could be the most formidable challenge for the company so far.

Tesla Inc. is set for launch in India. Still, the American electric car manufacturer likely remained an elite player for years, catering to only the wealthy and affluent in the world’s second-most populous country.

A Bloomberg article stated that Elon Musk is in talks to open a showroom and possibly a factory with the Galuru branch of other Indian states. According to a Bloomberg report, less than 1% of the vehicles sold in India are electric vehicles. 

Now, Tesla is planning to import and sell the Model 3 in India for around $ 65,000- $ 75,000 – about twice the price in the US market, sources familiar with the plans said.

Master said. “As a country, India is still not environmentally conscious of paying such a high premium.

Local production

Due to the lack of local production of components and batteries, negligible charging infrastructure, and high cost of EVs mean very few people in the price-conscious market. As a result, India’s debut electric vehicle (EV) market accounted for only 5,000 of the total 2.4 million cars has been sold in the country last year.

Gadkari told the Times of India that Tesla was initially expected to sell its vehicles in India, and Tesla would later consider setting up a manufacturing facility based on demand. In a recent media event, Gadkari said that the development of electric cars is being given attention and noted that many Indian companies are also considering developing electric vehicles.

The launch of Tesla’s business in India will present a significant challenge for the company. Here is that which challenges and difficulties Tesla may face in India. 

Challenges for Tesla in India

India announced steps to improve its electronics sales, but they may not be enough to increase sales of Tesla’s expensive electric cars. In 2015, India began rapid adoption and development of Hybrid and Electronic Vehicles (FAME), with rapid adoption and development of hybrids, according to the International Energy Agency, for subsidies for electric tricycles for buses to the tune of Rs 900 crore. A pledge of Rs is included electronic Vehicle (FAME).

Another FAME program was launched in 2019 with INR 10,000 crores to enable people to buy power supplies and build charging infrastructure. In addition, the government has decreased the Goods and Services Tax GST to 5% on electric vehicles by August 2019.

Tax rates for cars in India are among the highest in the world. It includes 28% Goods and Services Tax (GST) and fees ranging from 3% to 22%. Although subsidies for electric cars exist in places like New Delhi, this is not enough to afford Tesla cars for more people. Moreover, higher taxes inhibit demand, and thus the attractiveness of economies of scale for consumers decreases for manufacturers.

Last year, Ford announced the move to a joint venture for the majority of its assets. Therefore, it will be challenging for Tesla as large companies are exiting due to higher taxes.

Tesla’s Pricing Challenge and Customer Base

One reason is that automakers have pushed back, saying that there is no demand for EVs in India because the cost of batteries is high, and prices rise.

In India, the major challenge of Tesla is pricing. They were noting that Tesla’s expensive bids would not be eligible for EV subsidies in the region. Bloomberg New Energy Finance (BNEF) analyst Alan Tom Abraham told Bloomberg that the top limit to qualify for grants for EVs in India was INR. 15 lakhs.

Significantly, the Tesla Mode L3 manufactured in China is priced at 2,65,740 yuan, which is about $ 41,000. On the other hand, the cost of crossing the Model Y from Shanghai starts at 339,900 yuan. Therefore, the export price and duty on Tesla cars other than the price will not be met for most customers.

According to JATO Dynamics, Tesla is a significant player in China, contributing over a third of the carmaker’s global sales last year, and where it also has a factory.

Therefore Tesla’s sales volume in India will be modest. While Tesla faces challenges, electricity demand in India is now on the rise. According to a study by the Energy, Environment and Water Council (CEEW) for energy finance, the energy value in India could reach $ 206 billion the following fall. If it is to succeed, Tesla will have to maintain its commitment to India.

“It is when they build a factory in India,” Ives said, that building the local supply chain will be a multi-year effort.

Tesla – Conclusion

“India is a potentially sweet spot, and Tesla does not want to be late in the game.”

Tesla will begin pre-booking of its Model 3 vehicle, and delivery will take place later this year. In India, other Tesla models will be Model X, Model S, and Model Y with estimated prices of Rs 2 crore, 1.5 crores, and 50 lakh, respectively.

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