Long road for Tesla in India
Long road for Tesla in India with infrastructure, supply chain woes
It's also difficult to see how Tesla's
sought-after and expensive autonomous driving features will work on India's
congested roads.
Tesla Inc is gearing up for an India launch but the U.S. electric car maker is likely to remain a niche player for years, catering only to the rich and affluent in the world's second-most populous nation.
India's fledgling electric vehicle (EV) market accounted for only 5,000 out of a total 2.4 million cars sold in the country last year. A lack of local production of components and batteries, negligible charging infrastructure and the high cost of EVs mean there have been few takers in the price-conscious market.
It's also difficult to see how Tesla's sought-after
and expensive autonomous driving features will work on India's congested roads.
Ammar Master, a forecaster at consultancy LMC Automotive, said he expects Tesla
to annually sell only 50-100 of its Model3 electric sedans in India, at least
in the first five years.
"As a country, India is still not so
environmentally conscious to pay that much of a premium," Master said. "It
always comes down to the price point. There will be some high net-worth
individuals like movie stars and top business executives who will look at it
for the brand value. But then, how many buyers are there?"
The world's most valuable automobile manufacturer
registered a local company in India earlier this month, a step towards its
entry in the country, expected to be as early as mid-2021. Tesla plans to
import and sell the Model 3 in India for around $65,000-$75,000 - roughly
double the price in the U.S. market, sources familiar with the plans said. This
means it will compete in India's even smaller luxury EV segment that has
recently started seeing interest from the likes of Jaguar Land Rover (JLR) and
Daimler's Mercedes Benz.
The Mercedes Benz EQC, India's first luxury EV
launched in October for $136,000, and has since sold 31 units, according to
auto researcher JATO Dynamics. British luxury car maker JLR, owned by India's
Tata Motors, plans to launch its I-PACE EV before March. It sells in the United
States for around$70,000. Although India's road infrastructure has improved in
recent years, traffic discipline - like lane driving - is still rudimentary.
Auto analysts say that means many of Tesla's features like the automatic lane
changing function will be tough to deploy on crowded Indian streets.
Stray animals, including cattle, and potholes on
the road are a further problem. "Most of Tesla's high technology features
will be redundant and users will not get the bang for the buck despite paying
premium prices", said Ravi Bhatia, president for India at JATODynamics.
LOCAL PRODUCTION
Rohan Patel, a senior public policy executive at
Tesla in the United States, is among those leading efforts around its India
launch, the sources familiar with the plans said. The EV giant is looking to
hire 15-20 people mainly for sales and marketing, one source said.
India has some of the world's most polluted cities
and wants more clean cars on its roads, but the federal government still does
not have a comprehensive policy like China which mandates car makers to invest
in the segment. One reason is that auto manufacturers have pushed back saying
there is no demand for EVs in India as costs of components like batteries
remain high, and push up prices. And Tesla CEO Elon Musk has himself expressed
concern about India's high import taxes on cars. In contrast to India, China
sold 1.25 million new energy passenger vehicles, including EVs, in 2020 out of
total sales of20 million.
Tesla is a major player in China, which last year
accounted for more than a third of the car maker's global sales, according to
JATO Dynamics, and where it also has a factory. Daniel Ives of U.S.-based
Wedbush Securities said however that within 7-8 years, India could account for
5% of Tesla's total sales. The key to success, however, will be local
manufacturing, he said. "It is a matter of when, not if, they build out a
factory in India," said Ives, adding that building out a local supply
chain will be a multi-year effort.
"India is a potential sweet spot and Tesla
does not want to be late to the game."
Reference : thehindu.com
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