Tesla CEO Elon Musk postponed a scheduled trip to India this week, and he will meet with Prime Minister Narendra Modi on the grounds of “severe special” Sla’s obligation”.
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India has been working hard to become a global manufacturing hub, successfully inviting major companies such as Apple to set up and expand production in the country.
South Asian countries have been paying attention to further strengthening their manufacturing capabilities Tesla Establish bases in the country. Automakers, which now seem reluctant to appear for a long time, are now showing interest in the market as the Indian government tries to welcome it by implementing a new EV tariff policy.
Tesla It is reported Recruiting and scouting the country’s showroom locations Meeting Earlier this month, between Indian Prime Minister Narendra Modi and Tesla CEO Elon Musk.
“Absolutely, Tesla is coming to India based on recent news, and the government is very serious about it,” Puneet Gupta, director of automotive marketing for global liquidity in India, told CNBC.
India proposed an EV policy last year that proposed to lower Import tariffs on electric vehicles to 15% from About 70%,,,,, The domestic news agency IANS said the government will begin accepting applications under this policy before the end of March.
This relaxation only applies to premium electric vehicles at a price of over $35,000, requires investments totaling nearly $500 million, and requires long-term plans to build local manufacturing.
The EV policy is a targeted move to Tesla’s business interests, which shows that India is ready to support the electric vehicle manufacturing industry.
“The Indian government has been proactive in tempting Tesla to establish its manufacturing base in India,” he said.
However, the automaker faces several headwinds, breaking into the world’s third largest auto market.
Gupta and other analysts say whether Tesla’s entry makes sense under India’s investment plan, and automakers may slowly launch any of the automakers’ entry due to several entry barriers plan.
Price and commitment issues
If Tesla signs the plan, it will translate into the lowest price of a car that lands at $40,000, according to a recent research report by Bank of America.
At this price, Tesla electric vehicles will enter the Indian market at a high price, rather than the existing Indian OEMs cater to the Indian market and mean a small addressable market, Bofa said.
According to the planned EV plan, Tesla also needs to follow a three-year schedule to establish manufacturing facilities in India, increasing domestic value by 50% in five years.
Analysts say it would be too early to join the promise based on Tesla’s current price point.
A study by BNP Paribas pointed out on Monday that local production in India would be meaningless unless Tesla can lower its vehicle prices below $30,000 to allow bulk sales in India.
Meanwhile, Tesla has not yet shown significant interest in building manufacturing bases in the country, with its recent job openings mainly composed of consumer-oriented positions.
Furthermore, geopolitical barriers may affect Telsa’s decision to produce cars in India under the New Donald Trump administration. In an interview with Tesla CEO Elon Musk last week, President Trump said that India’s Tesla manufacturing industry will be “Very unfair.“
The company has also been working hard to complete the manufacturing plant production Germany and Texas.
“Slow and measure”
Given the price and investment challenges, experts told CNBC that Tesla’s Indian companies will export cars to the market to test the waters first.
“Tesla will be slow to enter India, given the low average market price, and it’s measured,” said BNP Paribas.
Meanwhile, S&P Global Mobility’s Gupta said Tesla could push India to further adjust its EV tariff policy, making it easier to start shipping to the country before making any investment commitments.
Some Local media sources In India, the government may further adjust its electric vehicle policy to attract Tesla to consider the market.
“Even if they are committed to the current proposal, it will be in about six months,” Gupta added.
But while the Indian EV market remains small, a foothold could bring valuable efforts to Tesla as it seeks new markets amid fierce competition with Chinese electric car manufacturers such as Byd.
“With the current momentum, we expect that by 2030, passenger BEV sales in India will reach 1 million units, accounting for 20% of total sales,” said GlobalData’s Ammar Master.
