Tesla has revolutionized commuting in many countries across the world, especially USA by bringing in electric cars which are luxurious, good looking and most importantly have adequate amount of range. Tesla had that it planned on bringing its most affordable car yet – the Model 3, in India by 2017. The Model 3 starts at $35,000 and the final production model is set to be unveiled in July.
The company however later retracted on these statements and played down the chances of Tesla’s arrival in India anytime soon. On 22 May, Elon Musk had posted a tweet saying – “Maybe I’m misinformed, but I was told that 30% of parts must be locally sourced and the supply doesn’t yet exist in India to support that.”
Now, however, it seems that Tesla is rethinking its plans and might be planning on entering India soon. Elon Musk has just posted a tweet stating that the company is in discussions with the government of India for temporary relief on import penalties/restrictions until it can build a local factory in India.
The biggest problem that Tesla faces currently is the huge amount of tax that CBU imported cars attract in India. CBU’s are completely built units that are imported as a whole into India. At the current rate of import duty, Tesla will not be able to price their cars competitively in India.
Tesla might find common ground with the Indian government as it is currently on a mission to make India a fully electric country by 2030. Back in April 2030, India’s Power Minister Piyush Goyal had said – “We are going to introduce electric vehicles in a very big way. The idea is that by 2030, not a single petrol or diesel car should be sold in the country.”
Another option that Tesla has is to bring the cars to India as CKD or completely knocked down units. This means that the certain parts of car are brought into India as kits which are assembled in the country. The import duty for CKD’s is around 25 to 40% in India.
This also points towards the fact that Tesla is planning to setup a manufacturing plant in India in the long run. In 2016, Indian transport minister Nitin Gadkari has actually visited Tesla’s headquarters in California and had proposed the initiation of a manufacturing plant in India. In 2015, Prime Minister Narendra Modi has also visited Tesla’s facility.
Electric cars are gaining momentum all over the world due to alarming pollution levels and depletion of traditional fossil fuels such as petrol and diesel. They offer zero tail-pipe emissions and are much cheaper to run and maintain than their tradition fossil fuel based counterparts. For example – the Mahindra e2o offers a running cost of just 70 paisa per km.
Governments in many countries including India are doubling down on the spread of electric vehicles – the Indian government has set an ambitious target of selling 6 million electric vehicles in the country by 2020. A major factor limiting the spread of electric cars in India is the initial price, which is a little prohibitive as the batteries are quite expensive.
India’s electric vehicle market is currently at a nascent stage with the Mahindra e2o Plus the only fully electric car on sale. It is priced at Rs 5.46 – 8.46 lakhs ex showroom Delhi and offers a 140 km range on a full charge. Cab service Ola has also electric vehicles in the form of Mahindra e2o Plus’s in top cities across India. A company called Lithium Technologies has started India’s first all electric cab service in Bangalore and car for hire service Zoomcar already has a few electric e2o’s.
