Tesla will introduce its highly-respected and popular line of electric cars to India starting with the Model 3 at the end of 2021. The government and individuals have strong incentives to adopt electric vehicles to reduce the nation’s carbon footprint. With fuel prices at an all-time high, air quality plummeting in major cities and global carbon emissions impact, the government has offered major import duty cuts to EVs. With Tesla’s intrinsic appeal and low maintenance cost in India’s untapped EV market, it was never more advantageous for an automaker like Tesla to make a grand entry and a big splash.
According to Karnataka Chief Minister, Tesla chose Bangalore to be the first city to receive a new plant. Tesla is also actively negotiating with other states. Rumours persist that Tesla plans to not only open a car assembly plant in Bangalore suburbs but also seeks office real estate for a potential Research and Development facility.
It is not surprising that Tesla chose Bangalore to house their new Indian facility. Bangalore is India’s IT hotspot and is rapidly becoming a major hub for aerospace, automotive and EV manufacturing. Tesla’s new Indian unit has been incorporated in Bangalore, following this decision.
Tesla understands that this entry comes with great promise and prosperity. However, there are many risks involved. Tesla entered the Chinese market and quickly established itself as the dominating premium EV manufacturer. Tesla is likely to be targeting India next, the second largest EV market by population after China. The problem lies in the fact, that while India is a country with a large population, many Indians don’t have the financial means to buy Tesla’s premium EVs.
India’s total EV sales accounted for fewer than 1% of the total vehicle sales, while EV sales accounted for 5% in China. Also, as in any emerging economy, the individual might not yet possess the necessary purchasing power for CEO Elon Musk to make sufficient Tesla sales. A virtually non-existent charging infrastructure is perhaps the biggest disadvantage for electric vehicles in India. Private and government incentives and policies are needed to build a vast infrastructure of charging ports throughout the country. Such a functional infrastructure will go a long way in ensuring widespread adoption of EVs in India.
The sheer potential of India’s emerging economy to generate wealth on a global scale, and the rising standard of living in India, combined with the already affluent Indians, owning a Tesla could become a viable option for some of the upper-middle class citizens in the future. They would very likely form the majority of Tesla’s customer base in India.