After many years of dithering, Elon Musk is ready to join the expanding Indian electric vehicle (EV) industry in the New Year, giving people hope that owning a cheaper Tesla Model 3 may soon be achievable with local manufacture of battery components and a solid EV supply infrastructure.
According to reports, the world’s wealthiest man will visit India for the ‘Vibrant Gujarat Global Summit‘ on January 10-12, as Gujarat has emerged as the “preferred destination for Tesla’s manufacturing plans” due to its strategic position and favorable business environment.
Musk’s declaration to manufacture in India is expected to be made in the presence of Prime Minister Narendra Modi at the centerpiece event, albeit neither the government nor Musk has made this huge news public.
According to industry analysts, Tesla costs are almost the same across the world, and the basic edition of the Tesla Model 3, the lowest model available, is now priced at $40,240 (about Rs 33.5 lakh).
The cost of importing this model into India would range between Rs 60-66 lakh. Electric vehicles (EVs) costing more than $40,000 are subject to a 100% import tax in India.
If all goes as planned, Tesla would be able to create 5 lakh electric cars per year, with prices starting at Rs 20 lakh, thanks to plans to establish an auto parts and electronics chain in India, as well as incentives and tax breaks.
While India’s official position is that no subsidies would be offered for EV imports, rumors have lately appeared that Tesla may be allowed the opportunity to import fully assembled vehicles at a concessional import price of 15-20%, a major drop from the current 100% tariff on such imports.
“This import duty can be eliminated by setting up local production, paving the way for a cheaper, more affordable Tesla car,” Counterpoint Research senior analyst Soumen Mandal told IANS.
This cost savings might also be realized if Tesla models made in India have fewer features than those offered in the United States.
“For example, certain hardware required for Full Self-Driving (FSD) could be eliminated and, instead, Advanced Driver Assistance System (ADAS) Level 2 could be included,” he said.
The imported from China battery pack may have a capacity of less than 50kW, and the electric motors may be of lesser power.
According to experts, the in-vehicle electronics might also be decreased, and a smaller center display utilized.
According to sources, if the government has considered providing advantages to Tesla, it will do so for other EV manufacturers and international entrants.
To break the impasse, Tesla executives have had long talks with government officials and industry leaders in India in recent months.
“The possibility of a Tesla in India for around Rs 20 lakh is dependent on several variables, including potentially attractive policy incentives and Tesla’s ability to achieve supply chain and cost efficiencies to effectively leverage local manufacturing. Overall, price choices will be dictated by Tesla’s business strategy,” according to Prabhu Ram, chairman of CyberMedia Research’s Industry Intelligence Group (IIG).
The automobile industry is very competitive. While regulatory incentives might provide Tesla a competitive edge, existing automobile industry incumbents would be encouraged to spend more and expand their EV offering, according to Ram.
By 2030, India’s EV industry has the potential to reach 40% penetration and generate $100 billion in sales.
According to a recent analysis by Bain & Company and Blume Ventures, this increase would be driven by significant adoption (over 45%) in both the two-wheeler (2W) and three-wheeler (3W) categories, with four-wheelers (cars) penetration likely to expand to more than 20%.
