Tesla's journey to India will not be easy. The giant electric vehicle led by Elon Musk (EV) has caused new speculation about its entry into the ground through a number of new rounds. However, the expansion on the Indian market will require much more than just the establishment of a trade – according to the CLSA note, it depends on local production and competitive pricing strategy.
The brokerage company pointed out that the gap of the Global offers of Tesla and the Indian market remains a critical obstacle. The average selling price of cars in India is $ 14,000 (R 12,13 lakh), while Tesla's most affordable model in the US is awarded $ 35,000 (30.3 lakh).
To make Tesla, Tesla had to appreciate its vehicles for less than 25-30 lakh, CLSA noted.
It contributes to complexity, Indian penetration EV is estimated to be only 2.4%, which is significantly lower than the key markets of Tesla – 30% in China and 9.5% in the US relative insufficient development of the Indian market is both the challenge and the opportunity for Tesla , if it successfully deal with fears in price and localization.
The main roadblock is a sharp import obligation of India. Vehicles under $ 40,000 attract 60% duty, while those over $ 40,000 face $ 110%, including agricultural CESS. Even if these obligations were reduced to Sub-20%, Tesla would still have to establish local production to make its cars viable.
“We believe that Tesla would have to set up production in India in order to expand with its current portfolio and the prices of its vehicles to less than 3.5-4 million R (35-40 lakh),” CLSA said.
Despite the buzzing around Tesla CLSA, it does not assume a major disturbance of leading Indian cars. Maruti Suzuki India, Hyundai Motors India and Tata Motors are unlikely to be significantly affected, due to the low penetration of the EV and the expected price of Tesla. If Tesla introduces Model 3 for a 20-50% higher road price than the upcoming home models, such as the Mahindra XUV 9E, Hyundai E-Creta and Maruti E-Vitara, its impact on the market will be limited, broke up brokerage.
In addition, Tesla's pressure on EV $ 25,000 (Rs 21.6 lakh) would require significant compromises on properties and specifications. Indian car manufacturers who already offer competitive prices with models rich in functions are well placed to maintain their strength.
Even if the Indian government revised import obligations of 15-20%, Tesla's prices would remain higher than most of the electric SUV with a long range from domestic players.
