15 Apr 2024

Hurdles Await Elon Musk's Tesla's Potential Entry into Indian Market

Tesla's CEO Elon Musk is anticipated to make a visit to India this month, possibly signaling an investment announcement in the country's electric vehicle (EV) manufacturing sector.

While expectations are high for Musk's reception, there are foreseeable challenges awaiting Tesla's entry into India.

Decline in demand for Tesla vehicles in China

Reportedly, Tesla is grappling with pressures in China, where local competitors have gained ground, causing a decline in demand for Tesla vehicles.

In this context, India holds significant importance for Tesla, mirroring the critical role electric vehicles play in India's automotive landscape.

India's recent EV policy adjustments, notably the reduction of import taxes on cars priced above $35,000 from 100 percent to 15 percent contingent upon a minimum $500 million investment by the company, are seen as efforts to attract Tesla.

Tesla's entry-level model not affordable for majority of Indian consumers

However, despite these welcoming gestures, Tesla may encounter obstacles. Notably, Tesla's entry-level model in the United States is priced around $40,000. This is not affordable for majority of Indian consumers.

Moreover, the rapid growth of Chinese EV manufacturers, exemplified by companies like BYD based in Shenzhen, presents formidable competition. For instance, BYD outsold Tesla in the final three months of 2023, signaling the competitive landscape Tesla faces in India's burgeoning EV market.

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