Even though Tesla automobiles are pricey, many individuals are eager to get their hands on one.
One of the reasons the cost is so exorbitant is that supply is not keeping up with demand.
Lowering costs will very certainly be made possible by increasing production capacity and constructing new facilities. Despite the high cost of Teslas in general, some countries have higher price tags for these vehicles than others.
Why is a Tesla twice as expensive in India as it is in the United States?
India’s duty rate is 60% for vehicles with a CIF value under $40,000. This year, Tesla expects to begin selling its electric vehicles in India, with a cost, insurance, and freight CIF, of more than $40,000, which means they will be subject to a 100 percent duty.
The company seeks a 60 percent duty reduction in this particular category.
Table of Contents
- Why is India rejecting Tesla’s appeal for a tariff reduction?
- Are Tesla’s batteries a factor in the cars’ high costs?
- How has Tesla responded to the Indian government’s demands?
- Is the fact that Tesla manufactures its cars in China impacting its price in India?
- What is the Indian market like for cars priced in Tesla’s range?
- Do Indians want to own a Tesla?
- How has Elon Musk benefitted from Tesla’s growth?
- Is Tesla’s growth prompting India to change its tariffs?
- What are Tesla’s views on India’s tariff?
- Can electric vehicle sales take off in India?
- Is it worthwhile for Tesla to proceed in India?
- Does the geopolitical anxiety between India and China further complicate a potential partnership with Tesla?
- Is Tesla open to the idea of production in India?
- Would production in India help Tesla expand further in Asia and other regions?
- Would the limited navigation system in India affect Tesla?
The request for tax benefits to import electric automobiles from Tesla Inc. was rejected by India because its laws already enable importing partially completed vehicles then assembling them at a cheaper tax rate.
India’s Prime Minister Narendra Modi’s regime has urged Tesla to manufacture their vehicles domestically, while Elon Musk expects India to decrease taxes as high as 100% on foreign EVs.
The high cost of Tesla’s electric battery packs, which power the vehicles, is another major factor in their high sticker prices.
The cost and energy efficiency of battery technology has increased in the last few years, but they need more analysis and modification to build an electric automobile that is genuinely inexpensive.
The costliest solitary element of these autos is the battery pack that stores and utilizes electrical power.
The firm has made substantial progress toward its aim of reducing battery prices per KWh (kilowatt-hours) for its vehicles.
As of 2019, Tesla’s battery costs are estimated to have dropped from $230 per KWh three years earlier, to $127 per unit.
It is estimated that Tesla’s battery prices are 20% cheaper than the sector’s average because of its volume.
Despite the government’s request, Tesla has failed to offer a plan for in-country manufacture and procurement, according to Johri.
Although the western state of Maharashtra, which is home to the financial capital of Mumbai, officially supported Tesla’s requests, the federal budget did not mention any tax incentives for the cleaner but imported automobiles.
Following Musk’s statement last year that Tesla was still encountering a lot of obstacles from the federal government, no fewer than five of India’s states have encouraged Tesla to set up shop in their respective provinces.
To avoid paying a higher import tax, India has requested Tesla to contemplate importing its vehicle parts or partly completed automobiles.
Tata Motors Limited and Mahindra & Mahindra Ltd., two of India’s leading automakers and suppliers of electric vehicles, should pave the way for Tesla, according to Johri.
“There are some who import fully built units from overseas. “It’s open,” he said.
Gadkari stated that he had informed Tesla officials that India will not be receiving a “made in China” model.
“I asked you not to manufacture the automobile and sell it in China.” As Gadkari put it, “It was something that came to mind and I shared it with them.”
“Make it in India, sell it in India, and export from India.” There will be no shortage of assistance from our government, he promised.
It appears that its government and Tesla are “signaling” based on the minister’s comments, as per Ravi Bhatia, the Director and President of automotive business intelligence firm JATO Dynamics India.
“As far as I can tell, there appears to be a common interest.”
For Tesla to sell a reasonable number of cars in India, the company would have done extensive market research and would have realized that its vehicles must be priced competitively.
Bhatia claims that the Indian market for cars priced higher than Rs 50 lakh is quite small.
Mercedes-Benz released an electric variant of its S-Class sedan in India, which they manufacture locally and is now available to local consumers.
Cars made by Suzuki and Hyundai’s Indian subsidiaries still predominate on Indian roads, with electric vehicles making up under one percent of total vehicle sales.
This underscores the enormous vacancy for EV-makers in the globe’s second-largest population.
A businessman from Bengaluru in southern India, Arun Bhat, who is a huge fan of Tesla Motors founder Elon Musk, was one of the first people in the nation to pre-order a Model 3 when pre-orders opened in 2016.
To make room for it, Bhat even got rid of four other fancy cars.
When asked when he expected Tesla to enter India, Bhat replied, “In the next couple of years. I’m a big fan of both the commodity and the simple design.”
After five years of waiting, he still hadn’t received a response.
Musk is now the richest man in the history of the world thanks to Tesla, the world’s most valuable automaker, which has a market cap exceeding $1 trillion.
This year, the company has seen record profits and global sales.
Electric vehicle sales might reach a record one million units worldwide by 2021, thanks to the company’s efforts.
Musk has been floating the notion of retailing Teslas in India for years, but he still hasn’t come up with a way to make it happen.
The company’s local policy leader, Manuj Khurana, has stepped up his efforts in recent weeks to seek a remission of high import tariffs, which would virtually quadruple the cost of imported Teslas.
Modi’s government prefers that Tesla commits to building its vehicles in India.
Four Tesla models were approved for sale in India by the Road Transport and Highways Ministry (MoRTH).
Even though it hasn’t made an official announcement about its plans for India, Tesla has already booked retail space.
It has opened an office in Bengaluru, and it is making crucial recruits to boost sales in the nation. However, things are currently at a standstill.
To begin selling imported automobiles without a tariff waiver, it would take a minimum of one year and a significant investment from Tesla to establish local production.
Tesla CEO Elon Musk referred to India’s “import duties as the most exorbitant worldwide by far of any significant country” during a tweet in July.
If India’s import tariff isn’t waived, local estimates say that a Tesla Model 3 that costs $44,000 in the US must sell for approximately $80,000 in India for the company to make a profit.
In addition, there are many other obstacles to overcome. There is a shortage of adequate infrastructure for charging electric vehicles in India, as well as incentives to encourage the purchase of electric vehicles.
It is estimated that India’s passenger and commercial vehicle sales will be less than 3.5 million in 2020 despite the country’s large civilization of 1.3 billion people.
There is decreased demand for both electric vehicles and high-end automobiles in India. Only approximately 5,000 Mahindra Electric vehicles were sold in India last year, accounting for under one percent of the overall sales of automobiles in the country.
“It’s like what others said regarding China: ‘a billion people that have no money isn’t a market,'” says Michael Dunne, a long-time analyst and counselor on the automobile industry in Asia who operates San Diego-based consultancy Zozo Go.
“This is where things stand with India,” he said.
Those who are wealthy and those who are just getting by are separated. There will be a lot fewer Tesla sales since in India the average price for a new vehicle is $10K.
The Giga Berlin Plant, Tesla’s new factory in Berlin, has received the German government’s approval to begin building electric vehicles, and the company is also producing Teslas in Austin, Texas.
Tesla is expanding rapidly around the world, including China, where it is increasing production and sales.
The second-largest country in the world in terms of population, India is not a very attractive market at the moment.
However, it has a rapidly expanding middle class that is well-versed in technology. Its long-term potential for growth is similar to that of China’s consumer market.
However, unlike in the United States and Europe, India isn’t offering huge discounts on the purchase price of electric vehicles to entice people to buy them to reduce pollution.
Instead, the government offers incentives like less expensive road and registration fees to entice people to buy electric vehicles.
Does the geopolitical anxiety between India and China further complicate a potential partnership with Tesla?
Tesla’s lobbying of the Modi government for tariff relief is further complicated by the geopolitical uncertainty between China and India.
Nitin Gadkari, India’s Road and Transportation Minister, has urged Tesla to stop shipping cars made in China to India and instead build them in India.
This month, he suggested in conversations with the media that India should produce electric automobiles and export them as well.
Gadkari promised Tesla CEO Elon Musk that if he agrees to do so, the company will receive major government backing.
In exchange for an exemption from tariffs, eccentric billionaire Musk has hinted at possible Indian production.
Musk tweeted in July, “A plant in India is extremely likely if Tesla can thrive with imported automobiles.”
The Modi government, on the other hand, has not budged from its insistence that the corporation first agrees to domestic production before considering any waivers or subsidies.
In October, Tesla executives did not offer any update on the company’s intentions for the country.
Zozo Go’s Dunne thinks that India is a great place to make vehicles for other regions that Tesla has yet to reach, such as New Zealand, Australia, Latin America, Africa, much of Southeast Asia.
As Hyundai Motor has shown us, Tesla may learn a thing or two from the South Korean company’s success in turning its Indian undertakings into one of the world’s largest exporters of cars and crossovers.
Another issue is navigating the small-town streets. Many aren’t marked on GPS, and in densely populated areas, traffic is frequently slowed – in some cases, completely stopped – by stray animals.
The autopilot feature of Tesla that lets you preselect your destination will not work in India. There are no signed routes, and there are animals and motorcycles on the roads, therefore, it’s almost impossible to navigate.