Why Tesla Hasn’t Entered the Indian Market Yet?

Hailed as one of the world’s most valuable companies, Tesla Inc., is currently the world’s most valuable automaker as well. An American multinational headquartered in Austin, Texas it functions in the automotive, artificial intelligence, and clean energy space. Tesla’s product repertoire boasts of designing and manufacturing electric vehicles (cars & trucks), battery energy storage (home to grid-scale), solar panels and solar roof tiles, and related products and services. In the year 2021, Tesla Inc. recorded the most worldwide sales capturing 21% of the battery-electric market and 14% of the plug-in market. Tesla Energy, a subsidiary of Tesla Inc., develops and installs photovoltaic systems in the US. The company is also one of the largest global suppliers of battery energy storage systems.

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Founding
Tesla's Products and Expansion
Tesla's Global Expansion
Tesla and India
Conclusion

Founding

The company was incorporated as Tesla Motors, Inc., on July 1, 2003, by Martin Eberhard and Marc Tarpenning, who also served as CEO and CFO respectively. It was Eberhard’s vision to build a car manufacturer that was also a technology company with its core technologies as the battery, computer software, and proprietary motor. Their third employee, Ian Wright, joined the team a few months later. It was in February 2004 when the company raised USD 7.5 million in Series A funding that included USD 6.5 million from the enigmatic Elon Musk. With the highest amount contributed, Musk assumed the position of Chairman of the Board of Directors as he became the largest shareholder of Tesla. A couple of months later, by May 2004, J.B. Straubel joined the company as the Chief Technical Officer.

It was in September 2009 that a lawsuit agreement by Eberhard and Tesla allowed all five – Martin Eberhard, Marc Tarpenning, Ian Wright, Elon Musk, and J.B. Straubel, to call themselves the co-founders of Tesla Motors Inc.

Tesla's Products and Expansion

The first car that Tesla officially revealed to the public was the Roadster in July 2006 and began its production in 2008. Two years later, the company purchased the Tesla Factory in Fremont from Toyota for USD 42 million. This was to begin the production of their new offering – Model S. In June of the same year, Tesla Inc. also went public through its IPO on NASDAQ. Tesla launched its second car, the Model S luxury sedan in June 2012 which went on to become the first electric car to top the monthly sales ranking within the country.

By the year 2015, Tesla entered the energy storage market and unveiled Tesla Powerwall and Tesla Powerpack battery packs. By September of the same year, the company also began shipping its third vehicle – Tesla Model X, the luxury SUV.

Tesla acquired SolarCity and entered the photovoltaics market in November 2016 and changed its name to Tesla Inc., in February 2017 to reflect on its expanding business. In 2017, the company also began selling its fourth vehicle model called the Model 3 sedan, which became the world’s best-selling plug-in electric car for 2018.

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Tesla's Global Expansion

It was in the year 2019 that Tesla opened its first Gigafactory in Shanghai, China marking its first foray into global expansion. By 2020, it also began constructing its new Gigafactory in Berlin, Germany, and one more in Texas, United States. The same year it also began delivering its fifth vehicle model – the Model Y crossover. By July 2020, Tesla Inc. became the world’s most valuable automaker by market capitalization by reaching a valuation of USD 206 billion. The company also became eligible for inclusion in the S&P 500 index after it reported consistent profits for four consecutive quarters between July 2019 and June 2020 and was added in December 2020. By October 2021, Tesla’s market capitalization reached USD 1 trillion and in March 2022 launched its new car factory in Berlin which is the largest for electric vehicles in Europe.

Tesla and India

In the year 2021, Tesla officially incorporated an Indian company in Bengaluru as Indian government officials stated that due consideration was being given to Tesla’s proposal of a sharp reduction in import duties for electric cars. However, even after all this time, the company is yet to move forward with service centers and supercharger stations.

Elon musk took to Twitter and posted – “Tesla will not put a manufacturing plant in any location where we are not allowed to first sell and service cars.”

This tweet came in response to the Indian government’s non-acceptance of Musk’s demand of reducing import duties on Tesla vehicles. Currently, India levies a 100% tax on imported cars costing upwards of USD 40,000 and 60% on cars that are valued at less than USD 40,000. These import taxes are inclusive of insurance and shipping expenses.

Nitin Gadkari, Minister of Road Transport and Highways of India clarified at the ‘Raisina Dialogue 2022’ held in April 2022 that it cannot be a good proposition for India if Musk wants to manufacture Tesla cars in China and sell in India. He went on to say – “Our request to him is to come to India and manufacture here. We have no problems. The vendors are available, and we offer all kinds of technology and because of that, Musk can reduce the cost. India is a huge market and offers good export opportunities too. Musk can export Tesla cars from India.”

In another interview with a media channel, Gadkari said – “Elon Musk is welcome in India. However, it will not be possible if he only manufactures in China and wants a concession for marketing in India.” He went on to say that Tesla can avail of all concessions and other benefits only if it manufactures its cars in India.

In response to this Musk tweeted - “Tesla isn’t in India yet due to challenges with the government.” He went on to clarify that he is ready to launch cars in India but the country’s import duties on EVs, according to him, are the highest in the world.

Conclusion

Between the years 2015 and 2020, Tesla expanded quickly, successfully acquiring many companies and increasing capabilities in battery technology. The company also increased its global presence within that time frame. However, the Indian government is maintaining a firm position regarding Tesla’s Indian foray. Union Minister Mahendra Nath Pandey, in July 2022, categorically said that Tesla can only come to India if it complies with the Atmanirbhar Bharat policy of the country. Hopefully, both parties can reach a mutually beneficial resolution soon.

FAQs

What are the primary reasons for Tesla's delayed entry into the Indian market?

The primary reasons for Tesla's delayed entry into the Indian market are high import duties, lack of charging infrastructure, and regulatory hurdles.

What steps can Tesla take to overcome the challenges of entering the Indian market?

Tesla can take several steps to overcome the challenges of entering the Indian market, including:

1. Localize production
2. Collaborate with Indian companies
3. Expand charging infrastructure
4. Launch more affordable models