In 2016, after years of promising an affordable electric car for almost 5 years since the launch of the seminal Tesla Model S, it announced plans for the Model 3, which would be its first mass-market electric vehicle. At the launch, Elon Musk, who is now the richest man on the world, promised a launch in India in the next year, but that has been a pipe dream ever since, even though the billionaire has kept teasing an Indian launch. Well, earlier in the year, Tesla finally formed an Indian entity with the investment pipped through its Dutch arm. It is expected we will be witnessing the launch of the first Indian Tesla, likely, the Model 3, for which it even took $1000 down payments from Indians. Even if the Model 3 comes to India, it has been reported that it could cost as much as Rs 60 Lakhs which is almost 2x of its official price. It will be out of the reach of the average Indian and for most people cars like the Tata Nexon EV or the MG ZV5 make more sense. Even despite this reality, the entry of Tesla in India is a big deal. It will be transformational. It was like the way when the iPhone 3G was launched in India despite the dominance of Nokia and BlackBerry.
Tesla Is The Apple Of EVs
Tesla is to EVs what Apple was smartphones back a decade ago. And if you look at it today, Apple only in Q4 of 2020 had its best quarter in the country and just managed a 4% market share of the overall smartphone market. In isolation, this is a very limited opportunity for both customers in India and Apple has a brand.
But if one looks at what happened around this because of the halo effect of Apple coming to India, India has become the most thriving smartphone market on the planet - today because of regulatory and cultural restrictions in China, it is India which is the most thriving smartphone market, even though it remains a firm number 2 in overall global market share. But it is a firm number 2 primed to overtake China in that space one day because of population, demographics and cultural evolution of new India.
India is turning into a smartphone manufacturing hub. It is the most competitive market and one of the most affordable places to buy a premium smartphone. Tesla is primed to do the same in India, but with advantages that even Apple didn't have.
India is already an automotive hub for the world. This was achieved decades ago. It has the right mix of the ecosystem, regulatory environment and scale in the market for it to become one. We are already seeing some EVs thrive - like the Nexon EV being a great example. Local two-wheeler manufacturers are doing even better - just one needs to look at Ather, Ampere, TVS and there will be more entrants like even Softbank backed ride-sharing biggie Ola Cabs. Despite, Oil prices being at an all-time low, the cost of fuel has been at an all-time high. There is deep economic sense to EVs - they are just better by being cleaner, cheaper and faster.
The problem is the cost of entry which even today remains at least 50 per cent higher than a similarly priced car, that disadvantage trickles away as there are no maintenance costs and the fuel costs are minuscule thanks to electricity being in play.
But India's infrastructure is ridiculously laughable for a full EV future. But if smogs in cities in Delhi are anything to go by, the extra influx of vehicles is adding to the issue. With that in mind, there are regulatory reforms in play that are pushing the development of infrastructure and also encouraging more and more manufacturers to introduce their electric vehicles. So things are changing because of a multitude of reasons.
Tesla will supercharge India's infrastructure
Overnight the introduction of a Tesla will not change the infrastructure of India which is more suitable for EVs. However, Tesla will not launch in India without having an intent of localising manufacturing capabilities and bring its supercharger network to India. Tesla has already announced an intent to develop a $25,000 hatchback in China which likely also come to India as it will be the most affordable Tesla.
Once Tesla is deeply entrenched in India which would take a good 3-4 years, EVs will be more affordable. Tesla has been at the forefront of pushing down the cost of batteries. And it will have that halo effect in India which will open up avenues for other manufacturers. At the same time, it will likely start rolling out some of its superchargers in India which will also help further improve the infrastructure.
The latest Model S do almost 1000 kilometres which means you can do an up and down drive from Delhi to Udaipur in it without stopping once. This technology is only getting better and when combined with more localisation and deployment of charging infrastructure, one can imagine EVs being ubiquitous by the end of this decade.
There is a long road ahead for EVs in India, but the entry of Tesla represents a major milestone because we have the population, the manufacturing know-how and the market for these vehicles. It will fuel local manufacturers and it will make India a global hub for manufacturing of EVs even if it doesn't do the heavy-lifting itself.
As now an electric car maker has become the world's most valuable automotive company, every big manufacturer wants a pie of Tesla's potential customer. Volkswagen committed $50 billion to electrify its fleet. Hyundai is now launching a new brand called IONIQ -- it will likely be Apple's partner for the Apple Car project. Everyone will want to win India. No push hasn't happened from global players to electrify India, but with the entry of the big kahuna of EVs, everyone will stop and pay attention to a country which will likely become the most populous one on the planet in this decade.
As electric cars are more like gadgets, India's thriving manufacturing ecosystem of consumer electronics will also come in handy. Contract manufacturers, LCD screen makers, battery tech companies all have already set up shop in India. All of them will be ripe partners for anyone who wants to deploy EVs in India.
That's the power of Tesla and it will be a huge fillip to India's economy, infrastructure and environment because of the domino effect of its launch.