Future Indian Economics: What will Tesla cost if it arrives in India? Is it going to work or not?
The electric vehicle market in India is referred to as a "sleeping giant." It has immense potential, and not just because it is the 5th largest global auto market by volume. We have an aspirational middle class, trying to decrease its carbon footprint, cheap labor and access to raw materials, and governments (state and central) that seem to finally realize the tremendous advantage of embracing EVs across the board.
It is still questionable why Tesla's absence from the Indian market is frequently bemoaned - even after a decade, they have yet to create an impact in India. Why?
First and foremost, the visible absence is not due to a lack of effort.
Tesla has been hinting at a 2019 debut ever since - it has already set up shop in Bengaluru by registering a corporation. Additionally, it is utilising Indian workers - and almost seven Tesla models have been confirmed roadworthy by Indian officials.
There’s not doubt that it's a massive undertaking to set up a vehicle manufacturing in India. However, Musk and the central government have been in talks for years and it’s unlikely that the difficulty originates from this bit alone.
He tweeted about it back in July, when he was chatting with a random person on Twitter.
— "We wish to do so (launch in India), but import duties are the highest in the world by far of any significant country!" India's climate ambitions appear to be at odds with the fact that clean-energy vehicles are taxed and regulated the same as conventional automobiles.
Why do we have such high import taxes?
The first thing to note is that they truly are amongst the highest in the world. The import tax rate in India is 60 percent for cars under $40,000 and 100 percent for cars over $40,000. Western countries such as the US and Canada impose single-digit rates, whereas emerging economies like as China and Brazil levy rates of 22% and 35%. Even the most basic Tesla model would cost upwards of 60 lakhs with the current import tariffs. As a result, making it prohibitively expensive for most Indians.
According to the government's new position, this action benefits domestic automakers. Automobile manufacturers hope that this will encourage them to "Make in India."
How come Tesla has not taken the risk and started manufacturing in India?
To begin with, Tesla has no immediate plans to build a production facility in India. They prefer to wait and see how India responds to the idea of future cars before launching a full-scale production line. Furthermore, EV sales in India currently account for about 1% of overall vehicle sales, and there is no indication that Tesla cars would fly off the dealerships when they arrive in India. That doesn't mean that the manufacturing facility will be a huge success even if they do, though it is possible.
Automobile makers in the United States have a lot to fear in India. GM and Ford have previously pulled out of India after decades of investment, despite the country's rapid economic growth. They built massive manufacturing plants only to discover that customers looking for the best deal opted to shop around for more economical options. So you can see why Tesla would much rather wait “Making in India” and sell imported vehicles directly to Indians.
The import duty is crucial here.
Except the government isn’t budging. As we already know, India has hefty import duties to stimulate local manufacturing. Tax cuts for Tesla and other emerging electric vehicle companies may not go over well with the country's manufacturers, whether they are homegrown or international.
Because of this, a Tesla automobile launch in India may be postponed for the foreseeable future.
There are ofcourse many other reasons that state this:
- Expensive : Many Indians would not accept a starting price of 50 lakhs for a car, preferring a more affordable option.
- Tesla’s Charging Stations: The expense of establishing charging stations in India would be prohibitive because Tesla's infrastructure has its own set of laws, which is why it would cost a lot to build charging stations there.
- Does it makes sense: The truth is, dangerous roads of India, on the other hand, nullify the elegant Tesla features.
Reference - https://www.youtube.com/watch?v=ume5mjxjrBI
The future is electric, but when it comes to Tesla, will India not come out on top?
Absolutely not; TATA, the market leader, will debut Avinya in India a made-in-India automobile. The car is reported to have a range of roughly 500 kilometres with a 30-minute charge. Tata has once again demonstrated its dominance in the market with this breakthrough innovation. What will be truly stunning is the arrival of cars built in India on the worldwide market.