American electric vehicle maker Tesla Soon in India, as the government is close to finalizing a concession on import duties for electric vehicles. This move could pave the way for Tesla to start sales of its popular models like the Model 3 sedan and Model Y crossover in India within 2023.
Tesla has been seeking lower import duties before it enters the price-sensitive Indian market. Currently, import duties on EVs range from 60% to 100% depending on the type of model. However, the government is now actively considering reducing import duties on EVs to 40%, which would make Tesla vehicles more affordable.
A senior government official said, “We are nearly ready to announce reduced import duties exclusively for electric vehicles. This will boost domestic adoption of EVs and attract global EV companies to launch their products in India. Tesla has been in discussions with us for some time and this duty concession can convince them to take the plunge.”
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Tesla CEO Elon Musk had confirmed the company’s plans to enter India in 2020 but cited “challenges with the government” over high duties. This concession by the government is likely the breakthrough Tesla was seeking.
Industry experts say that Tesla has the potential to revolutionize the EV segment in India. Tesla’s most affordable Model 3 sedan costs around $43,000 (Rs 35 lakh) in the US, which would translate to around Rs 60 lakh in India after taxes and duties. A 40% import duty concession could bring its price down by Rs 15-20 lakh, making it the most feature-rich and sought-after EV in the Indian market.
“Tesla EV’s boasting ranges of 400-500 km on a single charge can assuage range anxiety, which has been a key deterrent for EV adoption in India. Tesla’s supercharger network and seamless driving experience can set a benchmark for EV quality in India,” said Ravi Bhatia, President, of JATO Dynamics India.
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Tesla is also likely to evaluate the assembly of EVs in India in the future. Its Gigafactory in Berlin, Germany is still under construction and will cater to European demand first. Local assembly could further reduce prices by 10-12%.
“Tesla will study EV demand in India before considering local production. But as a long-term play, we can expect Tesla to set up an assembly plant here. India has ambitious EV targets and Tesla won’t like to miss out on this market,” said an industry expert on condition of anonymity.
Tesla’s move is also expected to spur competition and force other global giants to rethink their approach to India. Players like Mercedes, BMW, Volvo, Hyundai, and Kia have been historically hesitant to launch their premium EV models in India owing to a lack of demand and high costs.
Rahul Sharma, Principal Consultant at Gemba Management Consulting said, “Tesla’s entry could be the tipping point for luxury EV adoption in India. Other brands will closely watch Tesla’s performance and customer response before firming up their India launch plans.”
Tesla’s official entry may take 3-6 months from the duty revision announcement as it begins bookings and sets up sales infrastructure across major cities. But 2023 is likely to be the watershed year when Indians finally get access to Tesla vehicles on home turf.
“We are nearly ready to announce reduced import duties exclusively for electric vehicles. This will boost domestic adoption of EVs and attract global EV companies to launch their products in India. Tesla has been in discussions with us for some time and this duty concession can convince them to take the plunge.” – Senior Government Official
“Tesla EV’s boasting ranges of 400-500 km on a single charge can assuage range anxiety, which has been a key deterrent for EV adoption in India. Tesla’s supercharger network and seamless driving experience can set a benchmark for EV quality in India.” – Ravi Bhatia, President, JATO Dynamics India
“Tesla will study EV demand in India before considering local production. But as a long-term play, we can expect Tesla to set up an assembly plant here. India has ambitious EV targets and Tesla won’t like to miss out on this market.” – Industry Expert
“Tesla’s entry could be the tipping point for luxury EV adoption in India. Other brands will closely watch Tesla’s performance and customer response before firming up their India launch plans.” – Rahul Sharma, Principal Consultant, Gemba Management Consulting
