There is an electric vehicle revolution sweeping the world and India – a laggard so far – is hungry to join. So is Tesla, the most popular electric car.
After registering a subsidiary in India early this year, it seems Tesla is trying to move in now, as reports on Thursday said the company is scouting for locations to open showrooms in three Indian cities – and has even hired an executive to lead its lobbying and business efforts ahead of starting operations in the country.
The electric-car maker is rumoured to be planning to start with importing the Model 3 sedan as spare parts, assemble them in the country, and sell by as early as mid-2021.
Tesla’s Indian operations will also, reportedly, start with a research and development centre, its second outside the US. The other R&D facility is in Shanghai, in eastern China, where it has a Gigafactory to make electric cars.
The world’s most valuable automaker by market capitalisation is looking for commercial properties as large as 20,000-30,000 square feet each to open showrooms and service centres in the capital New Delhi, financial hub Mumbai in the west and tech city Bengaluru in the south, according to Reuters.
Separately, Tesla has recruited Manuj Khurana, a former executive of India’s investment promotion body Invest India, in the first major hire to lead its policy and business development efforts in the country, according to reports.
Khurana has previously been on a government panel on the future of transportation led by Prime Minister Narendra Modi’s top scientific adviser. In his new role, he is also handling Tesla’s market-entry process in India.
INFANT MARKET
While auto buffs can rejoice over Tesla’s entry, experts also say that despite the fact that Tesla could easily top the EV-popularity chart, like it has elsewhere in the world, India will be a tough market.
The electric vehicle industry is in its infant stages there, lacking much of the infrastructure needed for widespread electric car adoption. And the most popular vehicles are motorcycles, rickshaws and budget passenger cars.
According to Michael Dunne, of ZoZo Go, a California-based EV research and advisory firm, while India is hungry to join the EV race, the thing to overcome is that there is basically no market for electric cars.
He says 80% of the cars sold in India are priced under $12,000 – a price segment well below Tesla’s league – while India also faces serious infrastructure challenges.
HIGH COSTS
India’s fledgling EV market accounted for just 5,000 out of a total 2.4 million cars sold in the country last year as a negligible charging infrastructure and the high cost of EVs deterred buyers.
In contrast, China, where Tesla already makes cars, sold 1.25 million new energy passenger vehicles, including EVs, in 2020 out of total sales of 20 million, and accounted for more than a third of Tesla’s global sales.
Yet, the search for showroom space and Khurana’s appointment, within three months of registering in India, signal Tesla wants to move in fast.
Analysts say India’s rising number of affluent consumers makes it a potential high-growth market that the automaker can’t ignore as the government increases its focus on promoting clean cars.
MUSK TWEET
In October 2020, Tesla CEO Elon Musk said on Twitter the company will enter India in 2021 “for sure”, though the billionaire had issued similar tweets in the past.
In January, the company incorporated its subsidiary in India with three Tesla officials as directors, including David Feinstein, the director of global trade and new markets at Tesla.
Global property consultant CBRE Group – hired for the showroom searches by Tesla – has been surveying places for several weeks and is focusing on locations which will give the company easier access to affluent customers, sources said.
UPMARKET AREAS
Some luxury car showrooms in upmarket areas of metro cities are typically between 8,000-10,000 square feet, but most showrooms are far smaller in India where high-end real estate space is usually in short supply and property prices in New Delhi and Mumbai are among the highest in the world.
Early in March, India also offered to give Elon Musk the lowest production prices in the world in a bid to try to get him to make electric vehicles in the country, rather than just assemble his cars there.
Transport Minister Nitin Gadkari said the country was ready to offer incentives to ensure Tesla’s cost of production in India is less than China – if the carmaker commits to making its electric vehicles in the south Asian country.
• Indrajit Basu, with Reuters.
This report was updated on Jan 13, 2022 for style purposes.
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