Synopsis
Tesla needs to establish local manufacturing in India to thrive in the growing EV market, keeping prices between Rs 25 lakh and Rs 30 lakh, according to CLSA. Lowering import duties alone will not suffice for competitiveness.Key Takeaways
- Tesla should manufacture in India for better market fit.
- Price range of Rs 25-30 lakh is crucial for success.
- Impact on local players will be minimal.
- EV market in India is still evolving.
- New policies may facilitate Tesla's entry.
New Delhi, Feb 21 (NationPress) To achieve significant growth in the booming Indian electric vehicle (EV) sector, the American giant Tesla must start producing its vehicles domestically and aim for a price range between Rs 25 lakh and Rs 30 lakh, stated global brokerage CLSA on Friday.
CLSA emphasized that Tesla needs to set up manufacturing facilities in India to expand its existing portfolio and keep the on-road price of its vehicles below Rs 3.5-4 million (approximately Rs 35-40 lakh), even if import duties are lowered to under 20 per cent.
The brokerage also highlighted that Tesla's entry into the market is unlikely to have a major effect on local manufacturers such as Maruti Suzuki India, Hyundai Motors India, and Tata Motors, as the penetration of EVs in India is still developing and presents numerous growth prospects. Currently, India's EV penetration is estimated at 2.4 per cent.
The average price of cars in India is around $14,000 (over Rs 12.13 lakh), while the most affordable Tesla model in the US retails at $35,000 or roughly Rs 30.3 lakh, according to the report.
CLSA noted that if Tesla prices the Model 3 at an on-road cost that is 20-50 per cent more than competitors like Mahindra XEV 9e, e-Creta, and e-Vitara, it would not significantly affect domestic EV offerings.
Should Tesla introduce an EV priced at $25,000 (approximately Rs 21.6 lakh), the features and specifications may be considerably reduced compared to its standard models, according to CLSA.
As Tesla prepares for its entry into India this year, reports suggest that the government is revising a new policy aimed at boosting EV manufacturing within the country. Additionally, the Centre may provide further import duty reductions.
Industry analysts indicate that a more affordable Model 3, which serves as the entry-level option for Tesla, would only be feasible through local production of battery components and a robust EV supply chain.
Cost savings could be realized if Tesla vehicles produced in India come equipped with fewer features than their global counterparts.
Under the new EV policy announced last year, the Indian government has reduced customs duties to 15 per cent (with certain conditions) from the previous 100 per cent on imported vehicles. A minimum investment of Rs 4,150 crore (around $500 million) is required to establish manufacturing operations for EVs in the country.
