Tesla Model 3 in India : Tesla is known for making eye-watering electric cars starting at around Rs 70 lakh, but, according to a report that claims to have broken down the role of India’s capital markets firm CLSA, the cost of Tesla’s base model will be withRs 35-40 lakh. This is worked out with reduced import duties, road tax and insurance. Even with the price reduction through the duty reduction, the road price
will still be significantly high making it a premium segment choice for Indian customers over electric cars produced locally. This pricing bracket would play a critical role on Tesla’s marketability in a price-sensitive country like India, where ensuring low prices will be important in mass adoption of electric vehicles
Tesla Model 3 price in India: Import duties effect
Tesla would be forced to reprice its Model 3, which costs around USD 35,000 (approx Rs 30.4 lakh) in the USA, after it brings the car to India considering the import duty itself, and the taxes and other costs it will have to incur. CLSA argues that the Model 3 will cost 20-50% higher than certain locally rival EVs like the Mahindra XEV 9e, Hyundai e-Creta and Maruti Suzuki e-Vitara. Although the import tariffs are expected to be brought down to 15-20%, this will still make the car far more expensive than Indian-produced EVs, and hence not likely to be popular with India’s price-sensitive consumers.
Tweet This, Tesla’s local manufacturing approach to cost reduction in India
The research suggests that to keep functioning in the Indian market, Tesla will have to locate manufacturing in India.Now, this could go a long way towards that with the India EV policy promising to ease the import duties (by as much as 15%) on 8,000 units of EVs to the producers
who have invested more than Rs 4,150 crore setting-up locally. This will allow Tesla to cut down on its import expense and pass it on to customers. Without it, going past the premium price and the hassle of getting cars over to India might not be viable for the company. Is Tesla Community wrong with its pricing, and what does it mean for Indian Market?To drive home the potential challenges, CLSA draws parallels between Tesla’s story in India and the motorbike space, citing an analogy with the Harley-Davidson X440.
At 20%+ the price of the Royal Enfield Classic 350, the Harley-Davidson X440 also sells only 1,500 a month versus 28,000 Classic 350s sold. This price trend indicates that the Indian consumers are very sensitive to price, and anything above these price point levels might not help Tesla in boosting sales in India if it does not have a competitive price point. That’s been the proponent of competitive pricing being the catalyst to Tesla’s likely success in India.
Tesla ready to start its operation in India: Plans to in both Delhi and Mumbai
But in spite of the above issues Tesla is making great strides with its Indian market entry. GLOOK’s announcement comes after the company initiated hiring workers for key positions in India, meaning it is approaching the launch of its operations in the country. The first operations are expected to be located in the key markets of Delhi and Mumbai, which are expected to lead Tesla’s push to penetrate the Indian market.