Tesla, the US-based electric vehicle (EV) maker led by Elon Musk, may soon enter the Indian market as the Centre is finalizing a policy to extend concessional import duties on EVs exceeding Rs 30 lakh for 2-3 years. The policy is aimed at boosting employment and reducing the prices of EVs through local manufacturing. The policy may also require Tesla to provide bank guarantees for setting up a factory in India.
Tesla’s long-awaited entry into India
Tesla has been eyeing the Indian market for a long time, but has faced several hurdles, such as high import duties, lack of charging infrastructure, and low demand for EVs. In January 2021, Tesla registered a subsidiary in India, named Tesla India Motors and Energy Pvt Ltd, and appointed three directors. In July 2021, Musk tweeted that Tesla would launch its cars in India by the end of 2021, subject to regulatory approval.
However, Tesla has also expressed its concerns over the high import duties on EVs in India, which range from 60% to 100%, depending on the value of the car. Tesla has requested the Indian government to reduce the import duties to 15% for the first two years of operations, and has offered to invest up to $2 billion in India if the government agrees.
Centre’s new policy for EV imports
According to a report by Economic Times, the Centre is finalizing a policy to extend concessional import duties on EVs exceeding Rs 30 lakh for 2-3 years, which may benefit Tesla and other global EV makers. The policy may also require Tesla to provide bank guarantees for investing in a factory in India, which can be encashed if Tesla fails to comply with the specified timelines.
The policy is expected to be announced soon, and may be applicable to both fully built EVs and semi-knocked down EVs. The policy is part of the Centre’s efforts to promote local manufacturing of EVs and create employment opportunities in the sector. The policy may also help reduce the prices of EVs in India, which are currently much higher than the global average.
Tesla’s potential impact on the Indian EV market
Tesla’s entry into India may have a significant impact on the Indian EV market, which is currently dominated by domestic players like Tata Motors, Mahindra & Mahindra, and Ola Electric. Tesla’s cars are known for their high performance, advanced technology, and premium design, and may attract customers who are looking for luxury and innovation in EVs.
Tesla may also bring its expertise in battery technology, software, and charging infrastructure to India, and may collaborate with local partners and suppliers to create a robust EV ecosystem. Tesla may also inspire other global EV makers, such as Volkswagen, Hyundai, and Toyota, to enter or expand their presence in India, and create more competition and choice for the Indian consumers.
Tesla’s challenges and opportunities in India
Tesla may also face some challenges and opportunities in India, such as:
- Regulatory and policy uncertainty: Tesla may have to deal with various regulatory and policy issues, such as import duties, taxes, subsidies, safety standards, and environmental norms, which may vary across different states and regions in India. Tesla may also have to adapt to the changing policies and regulations, such as the proposed green tax on old vehicles, and the proposed scrappage policy for old vehicles.
- Customer preferences and awareness: Tesla may have to understand and cater to the customer preferences and awareness in India, which may differ from the global markets. Tesla may have to offer affordable and suitable models for the Indian consumers, who may be more price-sensitive and value-conscious than the global consumers. Tesla may also have to educate and inform the Indian consumers about the benefits and features of EVs, and address their concerns and doubts, such as range anxiety, battery life, and maintenance costs.
- Infrastructure and ecosystem: Tesla may have to invest in and develop the infrastructure and ecosystem for EVs in India, such as charging stations, service centers, dealerships, and supply chains. Tesla may have to partner with local players, such as power utilities, oil companies, and real estate developers, to create a network of charging stations across the country. Tesla may also have to source and manufacture some of the components and parts locally, to reduce the costs and increase the availability of its cars.
Tesla’s upcoming launch in India
Tesla is expected to launch its cars in India by the end of 2021, subject to regulatory approval and policy clarity. Tesla may start with its most affordable model, the Model 3, which may cost around Rs 60 lakh in India, after import duties and taxes. Tesla may also launch its other models, such as the Model S, the Model X, and the Model Y, in the future, depending on the demand and feasibility.
Tesla may soon enter India with a new policy for EV imports, which may create a new wave of excitement and innovation in the Indian EV market. Tesla may also face some challenges and opportunities in India, which may test its capabilities and potential. Tesla may also have a significant impact on the Indian EV market, which may benefit the Indian consumers, the environment, and the economy.
