NEW DELHI: Tesla has been exploring the possibility of establishing a manufacturing plant in the country, in lieu of customs duty concessions.
Ahead of Elon Musk’s visit next week, the Indian electric vehicle industry is looking at Tesla’s entry into India as representing more than just selling cars. Despite the expected higher pricing compared to competitors like Tata, Mahindra, and MG Motors, the view in the EV industry is that Tesla is aiming to establish a strong foothold in the Indian market.
Akshit Bansal, Founder & CEO, Statiq is of the view that beyond merely selling cars, Tesla’s bid to enter India indicates a broader strategic vision aimed at catalysing the adoption of EVs and advancing sustainable transportation infrastructure in the country.
“Tesla’s CEO, Elon Musk, has expressed interest in not only manufacturing vehicles but also exploring opportunities in renewable energy, battery storage solutions, and potentially even establishing gigafactories in India,” says Bansal. “Beyond sales, Tesla seeks to promote sustainable energy solutions, advance technological innovation, and contribute to India’s growing electric vehicle ecosystem,” adds Bansal.
Tesla has been exploring the possibility of establishing a manufacturing plant in the country, in lieu of customs duty concessions. Tesla also aims to source components worth around USD 1.9 billion from India in the current year, compared to USD 1 billion in 2022, Commerce Minister Piyush Goyal had said in September 2023. The Government has rolled out production-linked incentive (PLI) schemes for advanced chemistry cell (ACC) battery storage and the auto, auto-components, and drone industries, with substantial financial allocations. The entry of Tesla is seen as opportunely placed with a new policy which slashes import taxes on certain EV models to 15 per cent from as high as 100 per cent, contingent upon a carmaker investing at least USD 500 million and establishing a domestic factory within three years.
While this represents a significant step forward and is poised to provide substantial incentives to car manufacturers, the convergence of this policy shift with the Musk visit to India has built up concern in the auto industry as well as anticipation of the numerous opportunities that are likely to flow for both the company and India’s EV industry as a whole.
Though renowned for their premium pricing, Tesla’s popularity is undeniable. By establishing a presence in India, Tesla stands to gain access to a burgeoning market of tech-savvy consumers who are increasingly embracing sustainable transportation solutions.
Moreover, Tesla’s reputation for innovation and advanced technology could attract a segment of Indian consumers who value quality and performance over price alone. Musk, CEO of Tesla, is expected to announce an investment plan of USD 2–3 billion for Tesla in India, wherein the electric car manufacturer will not only make cars for the country but also export them to global markets.
The other upside is the beneficial presence of Tesla for the broader EV ecosystem. The increased demand for EVs spurred by Tesla’s entry is expected to drive the need for more charging infrastructure across the country. This presents an opportunity for EV charging network companies in India to expand their operations and cater to the growing EV market.
Collaborations between Tesla and existing charging network providers could lead to advancements in charging technology and infrastructure, ultimately accelerating the adoption of electric vehicles nationwide.
“At Statiq, we are fervently committed to enhancing accessibility to EV infrastructure by deploying charging stations across the country. To date, we have established 7000+ chargers spanning tier 1, tier 2, and tier 3 cities, with plans to expand to 20,000 stations by the end of 2025.” Says Raghav Arora Co-Founder & CTO, Statiq.
In 2023, India experienced a notable surge in EV sales, nearly doubling from the previous year and constituting 2 per cent of total passenger vehicle sales.
This rise highlights the growing momentum in EV adoption. The government has set an ambitious target of achieving a 30 per cent market share for EVs by 2030. “In FY’24, India’s electric vehicle (EV) market has shown promising growth across all segments, although from a relatively low base. Electric two-wheelers (2W) led the charge with sales of 9,47,087 units, a YoY increase of 30.06 per cent, electric PVs saw a significant uptick with 90,996 units, marking a 91.37 per cent YoY increase.
Auto-tech majors and start-ups, are therefore gearing up for competition and have started spearheading EV adoption and sustainable mobility initiatives as the surge in hybrid and electric vehicle sales in the full calendar year of 2023 push companies investing in advanced auto-tech features to enhance electric vehicle appeal.
This includes the development of connected cars and integration of autonomous driving technologies, leveraging cutting-edge advancements like artificial intelligence, Internet of Things and biometric systems. Revfin is offering innovative financing solutions for EVs, particularly through the battery-as-a-service model with focus on use of AI-powered tools for quick loan processing and responsible lending, including IoT-equipped vehicles for monitoring.
Another prominent player in the sustainable mobility and EV sector, ARENQ, is specialising in storage battery manufacturing and distribution.
The company is in strategic discussions to supply EVs to a major e-commerce conglomerate and is developing solutions not only for the domestic market but also the global landscape with collaborations with industry leaders like Lucas TVS.
Delta Electronics which offers fast charging solutions, enabling full charging within 2-3 hours, is building partnerships with government organisations like MSEDL and BPCL to establish Delta as a preferred partner for the Indian government and distribution agencies, facilitating the establishment of EV charging infrastructure across the country.
Additionally, it is forging partnerships with industry giants like TATA Power for fleet operations and BluSmart for setting up charging hubs. Sun Mobility is circumventing the limits of the charging infrastructure with their inventive battery-swapping technology which reduces range anxiety and encourages the wider use of EVs by making battery swapping at automated stations simple and rapid.
Ather Energy has emerged as a front-runner in India’s (EV) 2-wheeler segment, has established the Ather Grid, a network of fast-charging stations, effectively addressing the critical concern of range anxiety and paving the way for wider EV adoption. Moreover, Ather Energy’s emphasis on indigenous technology development has not only strengthened the domestic EV industry but also showcased India’s capabilities on the global stage.