Summary
- Indians preordered Tesla Model 3 in 2016, but the cars never arrived
- Tesla’s failure to follow through in India was due to concerns about high taxes and building a factory
- Other automakers have launched EVs in India while Tesla’s plans remain unclear
- India reduced import duties for EVs under $35,000 to attract automakers to build factories in the country
- Tesla’s global sales have been declining, indicating a need for more affordable cars to compete in emerging markets like India
Article
In April 2016, Elon Musk invited Indians to preorder the upcoming Tesla Model 3. However, the American automaker has failed to follow through on its promise to sell cars in India due to concerns about taxes making the vehicles too expensive in the country, as well as the challenges of building a factory in India. This lack of presence has led to frustration among Indian customers who had prebooked the Model 3, like Vishal Gondal, the CEO of health-tech startup GOQii. After waiting for six years without any clear updates from Tesla, Gondal decided to buy an electric SUV from German automaker Audi instead. Other luxury automakers selling EVs in India have also started to compete with Tesla.
India is the world’s third-largest auto market, but it has unique characteristics compared to other countries in terms of car prices and buyer expectations. The average price of cars sold in India is significantly lower than in the United States, making it challenging for luxury automakers like Tesla to compete in this market. Indian customers demand excellent after-sales services for luxury cars, which adds to the challenge for Tesla. To attract automakers like Tesla, India has reduced import duties for EVs cheaper than $35,000 as long as the company commits to building a factory in the country within three years. Despite this, Tesla has expressed concerns about the impact of import duties on the prices of its vehicles made in India.
The EV market in India has grown rapidly in recent years, with electric vehicle sales doubling in 2023. However, this segment still only makes up 2% of total car sales in the country. Chinese automakers like BYD have made inroads into the Indian market by offering affordable and premium EVs, presenting stiff competition for Tesla. In order to maintain its position among global automakers, Tesla needs to introduce more affordable cars tailored for emerging markets like India. The declining novelty of EVs and increasing competition from Chinese automakers have posed challenges for Tesla’s market dominance in India.
Despite the potential for growth in the Indian EV market, there are obstacles that Tesla must overcome to establish a strong presence in the country. Building a factory in India and establishing a dealership and service network are crucial steps for Tesla to succeed in the Indian market. The company would also need to invest in building a charging network in India, given the limited infrastructure currently available for EVs. While Tesla has plans to introduce a more affordable model priced around $25,000, the company’s intentions for the Indian market remain unclear. The evolving landscape of the EV market and increasing competition from established automakers and Chinese brands present challenges for Tesla’s expansion in India.
Indian customers remain skeptical about EVs, and Tesla needs to offer competitive pricing to win over mass market consumers. The potential for Tesla to succeed in India hinges on its ability to price its vehicles attractively while providing the luxury experience expected by Indian customers. The country’s strained relations with China and protections for domestic automakers further complicate Tesla’s entry into the Indian market. With uncertainty surrounding Tesla’s plans for India and the evolving dynamics of the global EV market, the company faces challenges in establishing a strong foothold in a growing but competitive market like India.
Read the full article here
