Hey Elon, Here's Why Tesla needs to be in India now!
Updated: Oct 19, 2019
*This article was later published in Clean Technica .
April 2016, having seen the Tesla Model 3 being revealed by Elon Musk via the live stream, I was tempted to reserve the same as soon as I saw that reservation was open to Indian buyers too. I pulled the trigger on 7th April 2016 and reserved a Model 3.
Since then our Unofficial Tesla Club India website and twitter page have been used to spread the good word on Tesla, its offering, advantages and the works. Now in October 2019 and no clear road map for Indian buyers to get a Tesla, I am confused and disappointed. I bought the Kona Electric as soon as it was available in India in August 2019, as I had to satisfy the need, the need to drive Electric and Tesla was meandering in its India plans. I felt neglected (oh the sense of self importance) and thought of cancelling my reservation a couple of times, but was never able to , seeing all the progress Tesla and Elon were making in shaking up the whole automobile landscape . I know 1000 USD is nothing to Tesla in the grand scheme of things but I believe in Tesla and want to support them in my small way. I being an eternal optimist hope Elon sees the potential of Indian market and what clean transportation and battery storage will do to India, Tesla should not delay entering India. This is my attempt to convince him.
I have no real data to know how many people have reserved the Model 3 in India, but from the publicly available articles I assume it must be more than a hundred. Hyundai was pleasantly surprised with their initial allocation on 350 Kona EVs’, all being sold out in India in 2 months. Kona EV introduced as a CKD unit in the base 39.2 kWh spec and costs approximately between $35,200 and $38250 depending upon which state of India one buys.
India like most countries has its extreme wealth gap, and a huge aspirational, burgeoning middle class. Luxury cars are one of the fastest growing segments in the market.
The approximate primary luxury car market is about 40,000 – 42,000 cars per year and growing. This segment is where Tesla will slot in. Tesla with its unique tech focused EV proposition can easily dominate this market and corner at least a 25% market share e.i. more than 10,000 cars per year if a proper strategy is in place. Even as of 2018 FY Tesla sold its cars in many markets with sales being sub 10,000 per year. Yes there are challenges w.r.t. import duties, but there are advantages too like zero road tax for EVs’ in many states, GST at 5% vis a vis 28% for an ICE car. Tesla simply can’t be a late entrant to India.
Let’s consider Model 3 in its 3 trims (4 if base variant considered) v/s the cars its competing with, i.e. Mercedes C Class, BMW 3 Series and the Audi A4 (all in USD).
As clearly visible from above chart, a SR+ CBU fully imported is at a cost advantage to all the 6 variants of the competitors even after including a whopping 60% import duty. A local basic assembly plant will be the most attractive solution for Tesla buyers and Tesla themselves, as even a performance Model 3 will be at par with the competition’s non performance models. Completely knocked down (CKD) kits, which include disassembled battery packs, electric motor and braking system among other parts that are not mounted on the chassis will attract 10% duty, while pre-assembled packs will attract a 15% import duty .
I have considered pre-assembled packs above for Tesla CKD at 15% duty for calculation. At an estimated 10,000 unit sold per year to begin with, Tesla can expect revenue of USD a cool $500 Million. This should warrant a very serious decision by Tesla and Elon