China’s loss in India may be Elon Musk’s gain.
Tesla has received a red carpet welcome in India for its proposed investment in the country, while its biggest rival in electric vehicles, China’s BYD, has been snubbed by increased scrutiny from New Delhi.
The result could be that Tesla can negotiate terms to enter the world’s third-largest auto market without facing the threat of competition from BYD as it does in other emerging markets such as Thailand.
“Who wins in India will have some bearing on who wins in the global electric car race going forward,” said Jasmeet Khurana of the World Economic Forum.
Since Musk met Indian Prime Minister Narendra Modi in New York in June, Tesla has had rapid closed-door discussions with Indian officials about potential factory investments and plans to build a new low-cost factory that will cost $24,000 (Approximately Rs. 19.85 Lakh)) Electric Vehicle.
Those talks have continued over the past week, sources said, with Tesla discussing details of plans to enter India’s fast-growing electric vehicle market and Prime Minister Narendra Modi personally tracking developments.
However, the meetings have been closely guarded secrets, and officials have not posted photos on social media shaking hands with executives, which is otherwise common after high-profile meetings.
Meanwhile, BYD appears to be taking a backseat. According to Reuters, BYD is no longer keen on seeking approval for its $1 billion (approximately Rs 8,233 crore) investment in India. In a further setback, BYD is facing an investigation into allegations it underpaid import duties from India.
Indian officials are concerned about the national security implications of Chinese-made vehicles and the data they may collect, among other concerns. One official said India was “uneasy about Chinese automakers”.
Although all investments from China have faced stricter approval requirements in India since the border conflict between the two countries in 2020, this may have a negative impact on India’s developing countries due to China’s dominance in battery materials, battery production and other technologies. have a huge impact on the electric vehicle market.
Tesla also has Chinese suppliers helping it cut production costs at its Shanghai factory, and now it wants to bring those suppliers to India – where it appears to have the upper hand in negotiations with New Delhi.
India has told Tesla that it will allow its Chinese suppliers into the country if they form partnerships with local companies, as Apple has done. But at the same time, India has balked at BYD’s $1 billion (approximately Rs. 8,233 crore) plan, even though it was also proposed in partnership with a domestic engineering firm.
China’s state-run newspaper Global Times said reports that BYD’s investment plans had encountered resistance “will trigger a chain reaction and undermine the overall confidence of Chinese companies to invest in India”.
BYD did not respond to requests for comment on its India investment plans or import tax claims. The company noted in a statement to Reuters that it has been active in the Indian market for 16 years and sells commercial and passenger vehicles there.
Tesla did not respond to a request for comment on its talks with Indian officials. Musk said in June that Prime Minister Modi “is pushing us to make significant investments in India, and that’s what we intend to do.”
India’s growing electric vehicle market
Tesla hopes to sell 20 million vehicles globally by 2030, up from 1.31 million in 2022, but the expansion of its Shanghai factory faces obstacles.
In 2022, BYD became the world’s largest seller of electric vehicles and plug-in hybrid vehicles, with sales totaling 1.86 million vehicles, the vast majority of which were in China. It trails Tesla in pure electric vehicle sales.
“Tesla mainly competes with BYD, and both companies are expanding rapidly globally,” said Gaurav Vangaal of S&P Global Mobility.
“If they want sales, they have to come to India,” he said, adding that India could also serve as an export base as the government encourages companies to produce electric vehicles locally.
Annual production of light electric vehicles in India is expected to rise to 1.4 million units by 2030, close to 19% of the forecast total of 7.25 million units, according to S&P Global Mobility estimates. In 2022, this number will be less than 50,000.
India’s nascent electric vehicle market is dominated by local player Tata Motors, whose best-selling Nexon EV sells for up to $19,000 (approximately Rs. 15.71 lakh), while Chinese automaker MG Motor’s ZS EV starts at $28,000 ( (approximately Rs. 23.15 lakh), while BYD’s Atto 3 retails in India for approximately $41,000 (approximately Rs. 33.90 lakh).
Toyota Motor, Hyundai Motor and Kia Motors all sell mid-size petrol SUVs priced around $24,000 (roughly Rs. 19.85 lakh), which is Tesla’s identified entry point.
Tesla does not currently sell vehicles in India.
“Tesla has become an aspirational product in name only,” said Sam Fiorani of AutoForecast Solutions. “Couple that with an affordable car that’s tailor-made for the Indian market. product, it has the potential to be a hit locally.”
© Thomson Reuters 2023
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