New Delhi: As Elon Musk-led Tesla prepares to enter the Indian market, a report from global capital market company CLSA indicates that even with reduced import duties below 20 percent, the most affordable Tesla car will cost around ₹35-40 lakh.
The report highlights that Tesla's least expensive Model 3 currently costs about $35,000 (approximately ₹30.4 lakh) at the factory level in the US. With anticipated import duty reductions to 15-20 percent in India, coupled with road tax and insurance, the on-road price would still be around $40,000 or approximately ₹35-40 lakh.
The report states, "The cheapest Model 3 for Tesla in the US is approximately $35,000. With tariffs reduced to around 15-20 percent in India, along with road tax, insurance, and other costs, the on-road price would be about $40,000, which is close to ₹3.5-4 million."
If Tesla prices the Model 3 20-50 percent higher than local EV models like Mahindra XEV 9e, Hyundai e-Creta, and Maruti Suzuki e-Vitara, it is unlikely to significantly disrupt the Indian EV market. Even if Tesla introduces an entry-level model priced below ₹25 lakh on-road and captures market share, the recent decline in Mahindra & Mahindra's stock already accounts for this possibility, according to the report.
However, the report suggests that Tesla's entry won't substantially impact major Indian automakers, given that EV penetration in India remains lower than in China, Europe, and the US.
Tesla plans to launch its models in Delhi and Mumbai in the coming months and has started its hiring process in India. On February 18, the company posted a job listing on LinkedIn for a Consumer Engagement Manager in the Mumbai Metropolitan Region.
The report also notes that for Tesla to make its cars more affordable and scale up operations in India, it would need to establish a manufacturing facility in the country, even with import duties reduced below 20 percent. Under India's EV policy, Tesla could benefit from a lower import duty of 15 percent on up to 8,000 units per year if it invests over ₹4150 crore in setting up a local facility.
The report draws a comparison with the Indian motorcycle market, where Harley-Davidson's X440, priced 20 percent higher than the Royal Enfield Classic 350, sells around 1,500 units per month, while the Classic 350 sells about 28,000 units monthly. This highlights the price sensitivity of Indian consumers, making it challenging for Tesla to gain traction without competitive pricing.
In conclusion, Tesla's success in the Indian market hinges on its willingness to invest significantly in local manufacturing. Without such investment, even with reduced import duties, Tesla's cars may remain unaffordable for many Indian buyers.