Elon Musk’s Tesla has announced that it is entering into India Market. It has already earned its name through various markets, like, China, South Korea, the UK, the Netherlands, and Norway and now it has reached to one of the world’s top five auto markets, India. But, Will Tesla Succeed in India Market?
India doesn’t have much desire for electric cars. While it is true that India has one of the largest auto markets in the world – it is fifth behind China, the US, Europe & Japan – and peaked at 3.3 million vehicle sales in 2018.
Indian Market for cars
Approximately 26 cars are in-use per 1000 people in India; this compares with 700–800 for the US and Europe and 200 for China, the world’s largest auto market. In contrast, looking at two-wheelers, India is the largest motorcycle market in the world and has around 170 motorcycles per 1000 people: clearly, motorcycles are the current mobility preference. The main reason behind this disparity is the price, as popular motorcycles are typically cheaper than the cars in India.
Adoption of Electric Vehicles
The largest barrier to the adoption of electric vehicles is the higher upfront price, which is, therefore, an even higher barrier in India. The result is India’s plug-in electric car market has never truly taken off and is currently fluctuating between 2000 and 4000 sales yearly, compared to 1 million sales from China in 2020. Looking at the models available on the Indian market, low-priced offerings (under $20k) are still well above the average car price and have less than 150 miles of range, for example, the Mahindra e-Verito or Tata Tigor, making them unattractive as well as unaffordable. The other issue is charging infrastructure, where deployment is also very low in the country.
Market entry of Tesla in 2021, unfortunately, does not solve these core problems, at least in the short term. Moreover, the government’s FAME-II policy does not subsidize private electric cars – only commercial ones – reflecting how the focus of electrification in India is still very much in the realm of micro-mobility (two and three wheelers), which are much easier to electrify and can use standard electrical outlets to charge removable batteries.