Just as the excitement is building for Tesla’s arrival in India, a UBS brokerage report has thrown cold water on the hype. While interest in the Elon Musk-led company remains strong, the report highlights the significant challenges Tesla will face in the Indian automobile market. From import tariffs and fierce domestic competition to the high cost of its EVs, Tesla’s impact in India may be far more limited than expected. So, hold off on the champagne—Tesla has an uphill battle ahead and is unlikely to disrupt the Indian market.
Think a budget Tesla is Coming? Think Again
Based on the UBS report, currently, the most affordable electric vehicle in the Tesla lineup is the Model 3, which costs around $35,000 (over Rs 30 lakh). Strictly speaking, the price itself is beyond the reach of the mass-market car buyers. The other point to keep in mind is practicality and the Model 3 has a low ground clearance of 138mm, which is going to be a challenge on Indian roads.
A lot has been spoken about how the Model 3 could go up against Mahindra’s flagship EV, the XEV 9e, but technically, it’s like comparing apples and oranges as the Tesla is a sedan while the latter is a full-size SUV. To counter the Mahindra juggernaut, Tesla can bring in the Model Y, which could go over Rs 50 lakh, while the ex-showroom of the top-of-the-line XEV 9e is under Rs 30 lakh.
According to the UBS report, Tesla will be present in the luxury segment and will compete against the likes of “high-end EVs such as the Kia EV6, BYD Seal, and Hyundai Ioniq 5 collectively sell fewer than 200 units per month. Since Tesla’s Model Y falls into the same premium price range, it is unlikely to generate significant sales volume.”
No ‘Make in India’ strategy yet
Tesla has confirmed that it will initially bring its EVs into India by import way rather than local manufacturing. Reports suggest that Tesla is in the hunt for land to set up its manufacturing facility and states like Gujarat, Maharashtra, Tamil Nadu and Andhra Pradesh could be an option for the EV maker. Without local production, Tesla will not be able to compete with domestic brands. Tesla analyst Joseph Spak believes that the company’s India strategy will remain focused on imports, further reducing its potential market impact.
