Tesla’s road to India will not be easy. The electric vehicle giant led by Elon Musk (EV) has sparked new speculations on its entry into the country thanks to a series of new recruitments. But the scaling on the Indian market will require much more than the simple implementation of the workshop – it depends on the local manufacturing and a competitive pricing strategy, according to a note from the CLSA.
The brokerage firm stressed that the price difference between Tesla’s world offers and the Indian market remains a critical barrier. The average sale price of cars in India amounts to $ 14,000 (RS 12.13 Lakh), while the most affordable Tesla model in the United States is at $ 35,000 (RS 30.3 Lakh ).
To make breakthroughs, Tesla should assess its vehicles less than Rs 25-30 Lakh, noted CLSA.
Adding to complexity, the penetration of electric vehicles from India is estimated at only 2.4%, considerably lower than the main Tesla markets – 30% in China and 9.5% in relative underdevelopment of the Indian market present Both a challenge and an opportunity for Tesla, if it has managed to respond to affordability and location problems.
A major obstacle is the steep import rights of India. Vehicles of less than $ 40,000 attract a right of 60%, while those of more than $ 40,000 faced a right of 110%, including the agricultural cess. Even if these tasks are reduced to levels of less than 20%, Tesla should always establish local manufacturing to make its cars viable.
“We believe Tesla should establish manufacturing in India to increase with its current portfolio and assess its vehicles within 3.5 to 4 million (RS 35-40 Lakh) on the road,” said CLSA.
Despite the buzz around the entrance to Tesla, the CLSA does not provide a major disruption of the main car manufacturers of India. Maruti Suzuki India, Hyundai Motors India and Tata Motors are unlikely to be significantly affected, given the low penetration of electric vehicles and expected prices of Tesla. If Tesla introduces model 3 at a road price 20 to 50% higher than the national models to come like Mahindra XUV 9th, Hyundai E-Creta and Maruti E-Vitara, its impact on the market will be limited, noted the brokerage .
In addition, Tesla’s push for an EV of $ 25,000 (RS 21.6 Lakh) would require significant compromises on characteristics and specifications. Indian car manufacturers, which already offer competitive prices with models rich in functionalities, are well placed to maintain their bastion.
Even if the Indian government revises import rights to 15 to 20%, Tesla prices would remain higher than electric SUVs within the reach of most national players.
