Tesla is coming to India, but would you buy a Rs 70 lakh compact sedan?

There’s more to their India entry than just cars. There are the questions of charging, sales, and most importantly, cost.


Tesla is coming to India. It has been coming to India for nearly four years, but finally looks like it will arrive in 2021. This was confirmed by Elon Musk—the founder of Tesla—and more recently Nitin Gadkari, the Minister for Road Transport and Highways. Like a few definitive events related to technology in India over the last few years such as the arrival of the iPhone on our shores, or PSLV-C37’s record-breaking mission to space, or the appointments of Nadella and Pichai, the arrival of Tesla promises to be a defining moment in our EV landscape.

India is no stranger to EVs. In fact, India was one of the earliest nations in the world to manufacture and export EVs; recall the Reva, or as it was called in the UK, the G-Wiz. And yet, the air leading up to the launch of Tesla in India is thick with anticipation, excitement and revelry! Why is that? I think this has nothing to do with the car as much as it has to do with the aura of Elon Musk. Everything Elon has touched in recent years has turned to gold; a King Midas for the 21st century. And Tesla just happens to be his evangelist, not the other way round.

But what exactly does Tesla coming to India bring to the table?

 Tesla is coming to India, but would you buy a Rs 70 lakh compact sedan?

From the get-go, Tesla broke the glass ceiling where EVs were concerned.

 

There is an aura, built over the years, around Tesla’s products. From the get-go, Tesla broke the glass ceiling where EVs were concerned. Their technology allowed greater range than almost every other EV anywhere in the world. Tesla built a fantastic charging network to support their products, and the cars appeal to a generation that is fed massive doses of cloud computing and over-the-air processes every day.

Then there’s the much-talked-about auto-pilot mode, though Tesla hasn’t moved ahead of Level 3 autonomy in their vehicles yet, due to legislation and an ecosystem not entirely ready to support it. There is certainly something futuristic about Tesla, but it has much to do with tremendously innovative marketing apart from the actual product itself. Nonetheless, that marketing is giving Tesla the upper hand where the future of automobiles is concerned, with the manufacturer outselling most of its peers in the EV segment and for a brief time, its Model 3 also outsold cars in its segment such as the Mercedes C-Class, the Audi A4 and the BMW 3 Series.

A Tesla Model 3 is seen in a showroom in Los Angeles, California. Image: Reuters

A Tesla Model 3 is seen in a showroom in Los Angeles, California. Image: Reuters

It is also cooler to be driving a Tesla than any other EV on the market, much like it was—once upon a time—cool to be driving a Prius, a car much taunted by Elon Musk. Tesla's top-down approach, starting off with a sports car to a volumes model and more recently a pickup, has helped grab headlines and customers. And its done this in half the time it's taken traditional players to do the same.

It's not just the development and product lineup that's put Tesla on the map.

Elon Musk introduced the SpaceX program, and in one instance you could consider either insanity or genius, he put a Tesla Roadster into the nose cone of a Falcon Heavy rocket and set if off on a wild ride past Mars, which Elon intends to colonise! Elon envisioned Hyperloop, a below-ground transportation tube that would allow hyper-speed travel between cities ideally in a—you guessed it — Tesla! He kicked off the Boring Company; the name alone received wild attention around the globe, for the very mundane job of boring tunnels. Then there is Tesla Tequila; who’d have ever thought liquor and driving would mix, but in a world where your autopiloted Tesla would drive itself, it’s a neat fit. At one level, it’s the outrageousness of every move that has Gen Y hooked. On another level, it's the fact that there are no limits that are inspiring millions to buy into Tesla.

But, where are the hurdles? If you’re the kind that follows digital and social media, you’d have gathered the noise around Tesla and would be led to believe that there are thousands waiting to buy a Tesla. That may be a challenge in Tesla’s early days in India, because of these four factors:

• Price

• Charging infrastructure

• Sales network

• Service network

At an expected price above Rs 70 lakh for the Model 3—their first product to launch in India—it’s expensive, even though the Model 3 is the cheapest electric vehicle Tesla sells. So a customer base would see, in my estimate, less than a hundred cars initially, with a build-up coming in slowly. The most affordable EV in India, the Tata Nexon EV, has to-date sold just about 2200 units in a period of around 10 months, a majority of these coming from institutional sales. It’s priced between Rs 14 lakh and Rs 16.25 lakh, yet has few takers right now. At the opposite end, Mercedes-Benz’s recently-launched EQC costs over a crore, and has significantly fewer takers. It’s safe to say that Tesla will find the road ahead steep.

Elon Musk had, at one point, also indicated that Tesla wouldn’t come to India without an adequate charging infrastructure in place that would enable Teslas to be driven without range anxiety. The charging infrastructure is still inadequate and sketchy at best, and most owners who use EVs charge at home. There’s nothing wrong with that, but if Tesla intends to add good numbers to its intended 2 million sales around the globe, they will have to step up and build their own charging infrastructure like they have in the USA. And supercharging isn’t cheap, though it still is cheaper than fossil fuels. Nevertheless, how convenient would it be for an owner to wait 30 minutes for a full charge in a country where we have little patience (or parking)?

Tesla also has a direct sales model across the globe. The company sets up its own stores and galleries where you can view and learn more about the range of cars, but you cannot buy from there. Sales are held purely online. It’s a fantastic model, but the one barrier to this is the entire registration, taxation and insurance services that most dealerships undertake for consumers in India. Most Indians find it too cumbersome to handle the process themselves; how would Tesla manage this? It’s a system that works brilliantly across the globe, but in India no one has successfully enough emulated the model. So far, you can only book a vehicle online, putting down an initial payment. To complete the sale, you still have to visit a dealership.

A Tesla car in a showroom.

A Tesla car in a showroom.

Similarly, with service, Tesla carries out over-the-air diagnostics and updates to take care of most of the electronics. But Indian conditions affect cars in myriad ways. Bad roads, reckless driving and many other issues ensure most workshops have a steady stream of business to repair mechanical issues in a car. Tesla would need to setup a robust service network, again something that will develop over time as volumes increase.

Tesla also has had a top-down approach in the many markets they are present in. This means they first introduce the more expensive and desirable products in the market, then scale down the range of products as sales step up. In India, they are going about business the other way around, contrary to what Elon had once stated. In a 2006 letter, Elon Musk mentioned how he intends to…

• Build a sports car

• Use that money to build an affordable car

• Use that money to build an even more affordable car

• While doing the above, also provide zero-emission electric power generation options

In India however, he would need more than an affordable car if the intent is to add to Tesla’s targeted volumes.
The affordable car is the Model 3, the more affordable cars are yet to come. Musk has indicated that Tesla will build a compact electric car; how compact is anyone’s guess at the moment. Would it be Corolla-sized, or smaller? Either way, it is not going to be ‘affordable’ for us in India, not unless Tesla localises production here. Now Tesla is building its 5th Gigafactory, but it’s coming up in the United States, contrary to expectations of it coming up in Asia (and hopefully, India). Tesla has clearly indicated that that sort of investment requires volume, and India certainly does not have the volumes to cater to Tesla’s business model at the moment.

(Also read: Tesla delivered 4,99,550 cars to customers in 2020; Elon Musk says it is a 'major milestone' for the company)

What Tesla could be doing is taking advantage of the 2500-unit homologation-free import clause introduced by the government of India. The DGFT allows cars valued over $40,000 to be imported into the country without having to go through the rigours of homologation, but not without paying import duties. To avail of this benefit, Tesla cannot come in with the base Model 3 which sits just a little under $40,000, so I expect the ‘Long Range’ variant will be the starting point, which retails at around $48,000 in the USA.

Overall, Tesla coming to India spells a push in the right direction for the whole EV movement. Nitin Gadkari, Union Minister of State for Highways and Road Transport himself announced Tesla’s period of entry into the Indian market less than a month ago. Something he hasn’t done for any other manufacturer, though he has graced several EV launches. It is definitely a feather in his cap to bring the world's foremost EV manufacturer to India during his tenure.

To conclude, I don’t believe Tesla is a revolution. They are pioneers that showed the world that it does not take a traditional automotive manufacturer, systems and processes alone to fill the void. An upstart visionary can easily come up and upset the apple cart; that’s the larger message. I'm also positive that Tesla coming to India will influence the whole EV movement more than before. It's the first time ever a solely EV manufacturer—one of the youngest automakers in the world—is making a foray into our market. The future has come to us!

The author is Editor at Overdrive Magazine. 


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