With the Twittersphere as the new hot place to broadcast political and corporate news, it comes as no surprise that Tesla CEO Elon Musk announced via Tweet his company’s plans to open up the India market.
Hoping for summer this year
— Elon Musk (@elonmusk) February 7, 2017
India first offered tangible support to the EV industry around 2010 when the new and renewable energy ministry announced incentives for manufacturers that included a cut in battery import duties from from 26% to 4% and price rebates of up to 20%.
The Indian electric vehicle (EV) market will be an interesting new expansion of the Tesla empire. India, with its population hovering around 1.25 billion people, has a transport industry that contributes about 5.5 percent to the nation’s GDP. Its transport sector is also one of the most diverse in the world. Millions of vehicles have a profound impact on traffic congestion. An inadequate parking infrastructure exacerbates transportation dilemmas. And that’s just the start.
Barriers from within the Indian infrastructure that Tesla will have to confront
Tesla’s entry into the Indian auto market will be intertwined with India’s need to address issues like safe public transportation, inadequate capacity of public transportation, road safety concerns, overcrowded road networks, poor traffic management, theft, poor road conditions, and inferior pedestrian walkways.
The EV, with a power source that produces zero carbon emissions, may not be the most important consideration for Indian consumers. Protecting the environment would be nice and all for the average Indian motorist, but a more important consideration for the average Indian consumer will likely Tesla EV’s affordability. For example, increases in sales of diesel vehicles concurrent with diesel price drops in India point to the important topic of price for Indian car buyers. Since the cost of EVs is significantly higher than their diesel — or petrol — counterparts, can the higher priced Tesla reach to enough consumers who might otherwise prefer the more fiscally reasonable EV compact and ultra-compact segment? Will financial structures in India allow for Tesla Leasing and Tesla Lending programs? It is hard to say as this is uncharacteristic of India’s financial markets.
The electric energy of EVs is stored in batteries, which are recharged at home or at EV stations. The need for an EV driver to have convenient access to vehicle charging stations to supply electric energy may be a significant initial obstacle for Tesla sales in India. Certainly, India has already demonstrated a growing need for widely distributed publicly accessible charging stations. Anticipating this need well in advance, Musk mentioned in 2015 about the company’s goal to set up a Gigafactory, the company’s battery plant, in India. That promise will have to become a reality to secure Tesla’s long-term stability in India.
Additionally, Tesla sales will be dependent on its ability to quickly and extensively establish a service network in the country.
What Tesla can offer to India’s sustainability market
Indian Prime Minister Narendra Modi toured the Tesla campus in autumn of 2016. This was a mutual opportunity to establish rapport and to understand cultural contexts of both parties. As a result of the visit, Tesla was invited to be a part of India’s plan to become a renewable energy hub.
One thing that Tesla has in its favor from the get-go: A proven new transportation option with their Model S and Model X vehicles. The Model 3 has also been made available for Indians via pre-order. Tesla can certainly help Indian’s National Electric Mobility Mission Plan (NEMMP) and FAME (Faster Adoption and Manufacturing of Electric Vehicles) to achieve goals of getting 6-7 million electric vehicles on the roads by 2020.
And who knows what the EV market in India will look like in a decade + with Tesla’s guidance? India’s government is hoping to be a 100 per cent electric vehicle nation by 2030. Tesla can lead the way.