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The CEO of Tesla, Elon Musk, postponed a scheduled trip to India this week, where he would meet with Prime Minister Narendra Modi, citing “heavy obligations of Tesla”.
Anadolu | Anadolu | Getty images
India has struggled to become a global manufacturing center, having successfully invited the main companies such as Apple to establish and expand production in the country.
To further reinforce its manufacturing skill, the nation of southern Asia has been looking Tesla to establish its base in the country. And the automobile manufacturer who has seemed reluctant for a long time is now pointing out interest in the market, since the Indian government tries to welcome him by implementing a new EV Rate policy.
Tesla As reported, it is recruit and explore locations from the exhibition room in the country, after a meeting Between Indian Prime Minister Narendra Modi and the CEO of Tesla, Elon Musk, earlier this month.
“One thing is safe, Tesla comes to India based on recent news, and the government is also very serious about it,” Puneet Gupta, director of the Indian automotive market of S&P Global Mobility, told CNBC.
India introduced an EV policy last year that proposes to reduce the Import duties in EV at 15% of about 70%, With the government ready to start accepting requests under this policy before the end of March, according to the National News Agency Ians.
This relaxation only applies to Premium EVs with a price of more than $ 35,000 and requires investments for a total of almost $ 500 million and long -term plans to establish local manufacturing.
The EV policy represents a specific movement to appeal to the commercial interests of Tesla, indicating the preparation of India to support CNBC of the manufacture of EV, Ammar Master, an automotive director of South Asia in Globaldata.
“The Indian government has been proactive in its attempts to attract Tesla to establish its manufacturing base in India,” he said.
However, the car manufacturer faces several winds against to go to the third largest automotive market in the world.
It is not clear if Tesla’s entry makes sense under the investment scheme of India, with any plan that the car manufacturer will be probable that will be implemented slowly and measured due to several entry barriers, Gupta and other analysts said.
Price and commitment problems
According to a Recent Research Note from Bank of America, if Tesla entered this scheme, it would translate into minimum car prices of $ 40,000 cars.
At this price, Tesla Ev would enter the India market at a very high price, above what the existing Indians attend and imply a small direct market, Bofa said.
According to the planned EV scheme, Tesla would also need to follow a 3 -year schedule to establish manufacturing facilities in India, reaching a 50% domestic value addition within 5 years.
Analysts say that jumping to this commitment would be premature for Tesla, depending on their current price points.
A BNP Paribas research note declared on Monday that local production in India will not make sense unless Tesla can reduce the prices of your vehicle to less than $ 30,000 to allow massive volumes in India.
Meanwhile, Tesla has not yet indicated a significant interest in establishing a manufacturing base in the country, with its recent work openings consisting of mostly consumer -oriented positions.
In addition, geopolitical barriers can influence Telsa’s decision to produce cars in India under the new Donald Trump administration. In an interview with Tesla CEO, Elon Musk, last week, President Trump said Tesla’s manufacturing in India would be “Very unfair.”
The company has also been working to complete the production of manufacturing plants in Germany and Texas.
‘Slow and measured’
Given the price and investment challenges, experts told CNBC that the incursion of Tesla India will begin with the export of cars to the market to first test the waters.
“We hope that the entrance of Tesla into India is slow and measured, given the low average price in the market,” said BNP Paribas, and pointed out that the company has plans to launch more affordable models at the end of this year.
Meanwhile, Gupta of S&P Global Mobility said that Tesla will probably push India to further adjust its EV Rate policy, which allows you to start sending the country more easily before making any investment promise.
Some Local media sources In India, they reported that the Government can further modify EV policy to attract Tesla considers the market.
“Even if they commit to the current proposal, it will be after six months or so,” Gupta added.
However, although the EV Indio market is still small, obtaining a support point could be a valuable effort for Tesla, since it looks for new markets in the midst of intense competition with Chinese EV manufacturers such as Byd.
“With the current impulse, we project that the sales of Bev passengers in India will reach 1 million units by 2030, which represents 20% of total sales,” said Ammar Master of Globaldata.
