Tesla’s entry will compel existing EV manufacturers to re-evaluate their vehicle offerings
GlobalData, a leading data and analytics company, states that Tesla’s long-awaited entry into the Indian automotive market is gaining momentum. Elon Musk’s recent statement following his meeting with Indian Prime Minister Narendra Modi during the latter’s US visit has further solidified expectations of Tesla’s entry. As a pioneer in the industry, Tesla’s presence in India is anticipated to intensify competition in the battery electric vehicles (BEVs) market.
Sumit Das, Senior Analyst at GlobalData, explains that Tesla’s entry will compel existing EV manufacturers to re-evaluate their vehicle offerings. Tesla is known for its wide range of technologically advanced features, which are currently only available in high-end models in India. This is expected to bring about significant changes in the automotive sector, leading to advancements in technology and added features in new models.
Establishing a manufacturing facility in India will enable Tesla to maintain price parity with other players in the mid-range EV segment. Competitors such as MG, Mercedes, and Audi are striving to capture the Indian market, with Mercedes already increasing production of its EQS model in Chennai due to growing EV demand. However, Tesla may hold certain technical advantages over its competitors, including the EQS.
India recently surpassed Japan to become the world’s third-largest passenger vehicle market in 2023, making it an attractive destination for foreign companies like Tesla to establish their manufacturing operations. Sales of BEVs in India reached nearly 50,000 units in 2022, and a compound annual growth rate (CAGR) of 25.7 per cent is expected over the next decade, leading to a projected one million units sold by 2033.
Gorantala Sravan Kumar, Associate Project Manager at GlobalData, emphasizes the significance of the recent discovery of the third-largest lithium-ion reservoir in Jammu and Kashmir and Rajasthan. This discovery has increased the need for establishing EV manufacturing plants for global original equipment manufacturers (OEMs) in India. Tesla, recognizing the long-term market attractiveness and the availability of lithium-ion reserves, can penetrate the Indian market by setting up a manufacturing facility in the country.
India is projected to experience a CAGR growth of almost 35 per cent in EV production from 2023 to 2030, with BEVs expected to comprise over one-fifth of the total cars produced in the country during this period. This indicates a potential market for EVs in India, creating opportunities for new entrants. Additionally, the availability of low-cost resources is likely to encourage global automakers to consider establishing their manufacturing facilities in India.
Das concludes that the entry of new foreign players, including Tesla, will bring new technologies and provide a better user experience in the Indian market. The arrival of MG in India has already sparked changes in the market with its extensive offerings in terms of features and technology, prompting other domestic and foreign players to implement similar advancements. However, the impact of Tesla’s entry will largely depend on its ability to competitively price and market its products within the Indian market segment.
