By Tesla CEO Elon Musk announced on Twitter this morning that the Model 3 electric car will soon be made available in India – currently, only select countries have access to it.
Last year, Tesla opened pre-orders for their affordable mass market electric vehicle to residents in India, Brazil, South Africa, South Korea, New Zealand and Ireland. Indian tech startup pioneers such as Paytm founder Vijay Shekhar Sharma and venture capitalist Mahesh Murthy quickly reserved cars by making a non-refundable $1,000 deposit deposit payment.
Why Tesla?
Tesla’s arrival to India was met with great anticipation, having established quite the reputation among India’s rich and famous. From Paytm founder Vijay Shekhar Sharma to Essar Group CEO Prashant Ruia – there are numerous businessmen who have pre-ordered one!
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India is a huge market for Tesla, but it’s not easy to enter. Before they can face high import duties, they must overcome major obstacles such as rough roads and lacks of charging stations.
Many assume India is too poor for an electric luxury vehicle like Tesla’s Model 3, so its market should not support an EV like that one. But that assumption would be false; while many of India’s 1.387 billion population may be poor, its middle class remains ready and willing to buy an eco-friendly car such as this Tesla offering; they even willing to pay premium prices for it! Tesla could potentially transform itself with successful pricing of their Model 3 offering here; pricing it correctly can become an invaluable opportunity to change its fortunes; so determining how it can do just that will become key for them – they need only discover how it will perform when released there!
Why India?
Indian EV enthusiasts are eagerly awaiting Tesla’s Model 3’s arrival. The American car maker has been testing its entry-level electric vehicle in India for some time, although its test vehicles remain concealed by heavy camouflage. Recently, its shiny blood red Model 3 was seen driving around Bangalore Karnataka streets – pictures were posted to Automobili Ardent Facebook page that showcases vehicles.
Elon Musk, founder and chief executive officer of Tesla, has hinted at bringing their Model 3 car to India in the future. In 2016, India joined Australia, South Africa, UK China New Zealand as countries where pre-orders could take place for this car which costs $35,000 but comes fully self-driving capability. Over 115,000 Indians made deposits of $1,000 to secure their place on the reservation.
Musk is reported to be looking into opening a factory in India, in order to take advantage of tax exemptions and concessions offered by its government. Over 115,000 Indians have made a $1,000 deposit to secure their place.
Musk reportedly plans to set up a manufacturing facility in India to take advantage tax concessions and exemptions offered by that country’s government. India actively encourages electric mobility through improved infrastructure and by encouraging existing manufacturers launch more vehicles.
s. Ives believes Tesla may face difficulties fulfilling local sourcing requirements set forth by India; however, these are not insurmountable challenges.
With production ramping up quickly, healthy profitability and cash flow, and plans for a lower cost car being implemented alongside falling battery prices, Tesla looks poised to conquer new markets like India – many analysts anticipate India as being its next frontier for this EV giant.
India’s road conditions
Tesla has long wished to enter the Indian market, yet various obstacles have prevented its entrance. These include inadequate charging infrastructure and high import duties on cars and parts.
However, US-based electric carmaker Tesla appears set to finally bring its Model 3 sedan to India. Responding to a query posted on Twitter by user @r_pk1918_k, Elon Musk confirmed that India will see its launch between late June and early September of this summer (late June to early September).
The Tesla Model 3 EV is an entry-level EV with a starting price of $35,000 that has attracted record levels of preorders. Unfortunately, India will receive only 75 kWh battery instead of 100 kWh batteries as is common elsewhere; although this will reduce range by 50km.
Tesla will enter an already highly-competitive and oversaturated Indian EV market with its launch of Model 3. Established local players such as Mahindra & Mahindra, Tata Motors and Ford are already present; as are newcomers such as BYD who has already established itself with models like Atto3 and Seal EV.
In order to compete with its more established rivals, Tesla’s Model 3 must offer an irresistibly attractive value proposition. Its sleek design, fast acceleration and long range capability should appeal to Indian buyers while its significantly lower pricing may help.
Taxes and duties
India, as the fifth-largest car market in the world, presents an immense opportunity for any company. Unfortunately, it also features some of the worst roads and driving practices that do not always adhere to standards – an obstacle which Tesla has worked tirelessly on for years and nearly overcame on numerous occasions.
The company established its initial Indian office in Bengaluru and began by importing and selling Tesla Model 3 cars. But its plans for expansion include developing its own network of Superchargers as well as eventually starting local manufacturing operations.
But for that to occur, Tesla must reduce import duties on fully imported EVs. Elon Musk has written to Niti Aayog ministry asking them to reduce these taxes which currently range between 100-200% for an EV.
It would make the Tesla Model 3, more affordable to Indian car purchasers and increase demand. Indian car buyers consider price when purchasing a vehicle. If it becomes too expensive for most, the demand could decrease.
The Indian government is likely to remain firm with its high import duties in order to support local manufacturing and to support their own companies. However, it may offer Tesla a reduced tax rate so that the company can test the market.
If the Tesla Model 3 is popular in India, they might invest in their factory to produce more affordable versions of the car. Drivers in India will have to tolerate bad road conditions until then, while still enjoying some of the most advanced tech features.
Manufacturing in India
Tesla’s business may be flourishing, yet production hasn’t kept up with demand, meaning that exporting cars as quickly as desired may not be possible. According to analysts, it may be wise for Tesla to try its hand in India.
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India is an enormous market for electric vehicles, according to Dan Ives, managing director at Wedbush Securities. Unfortunately, however, India also features some of the worst maintained roads and drivers who disregard traffic rules.
Cost can also be an obstacle, making owning an electric car in India difficult for some people, yet by reducing import taxes on certain electric cars more people could buy one, potentially helping boost local economies while aiding companies that specialize in producing parts for such vehicles.
Indian authorities are in talks with Tesla about reducing some taxes on its electric vehicles (EVs). To qualify for this offer, Tesla must commit to opening a factory within its borders – otherwise import duties could apply which would put serious restrictions on sales of its cars into India.
If the government approves this agreement, Tesla could begin importing their Model 3 into India as early as summer of 2020. Establishing manufacturing base may take longer, but once done could help accelerate global expansion plans while giving an edge against established international automakers that have made inroads into India’s market. Furthermore, setting up Supercharger networks across India would only further aid their expansion plans.
