Why hasn’t Tesla entered the Indian car market?

Tesla makes the most aspirational electric cars. Its EVs (Model S-3-X-Y) are some of the quirkiest and coolest cars out there that use innovative technologies to combine performance and practicality in a unique fashion. Despite the American brand having a massive fan-base in India, Tesla faces tough challenges that restrict its entry into the Indian car market.

High Import Duty

A standard Tesla Model 3 with 355km range and a 0-100kmph time of 5.6 seconds costs USD 35,000 (Rs 27 lakh). Considering India’s extremely high 125% import duty, the Model 3 would cost north of Rs 60 lakh in India, slotting it in the league of luxury saloons such as the BMW 5 Series or the Mercedes-Benz E-Class. Affordability is a key element for business in India and vehicles belonging to this price range are low-volume sellers. We hope that the government amends customs’ laws and eases the tax structure for imported EVs so that Tesla can trigger a much-needed spark in EV sales in India.

Lack of raw materials

Metals like lithium, cobalt and nickel are critical battery components that are scarcely produced in India. Another critical element is charging infrastructure, which demands large scale collaboration between local governments and carmakers. That’s why Tesla turned to China for building its second Gigafactory in Shanghai after Nevada. China is the largest EV market in the world with massive capabilities in battery manufacturing and naturally it made more sense for Tesla to invest in Shanghai instead of India. For Tesla to consider building even a micro-factory, government needs to ease land and labour laws and encourage local production of raw materials.

Making a joke out of Autopilot

Apart from earth shattering performance and impressive range, the advanced Autopilot system is standard equipment in all Tesla EVs and also one of the key USPs for buyers. The system comprises of a complex suite of advanced driver assistance systems (ADAS) that make the car autonomous, although active driver supervision is recommended. However, radar-based assistance systems face legal uncertainty in India with no frequency bands allotted for carmakers to even start testing these technologies. And lastly, poor road infrastructure with no uniformity in sign boards, pedestrian behaviour, traffic pattern and road markings will make it difficult for Tesla Autopilot to function normally.

On the bright side, things seem to improve with time. The GST on electric cars is reduced from 12 per cent to 5 per cent while GST on batteries is down from 18 per cent to 5 per cent. Government has allotted Rs 10,000 crore for the FAME 2 scheme making hybrids and EVs available at subsidized rates. There’s also the 2500-unit homologation-free import route for low-volume cars that manufacturers are now taking advantages of. Let’s hope that more such measures are brought into place by the government to make this distant dream a reality. And if that happens, who knows, we might witness a made-in-India Tesla EV strapped to SpaceX's rocket getting released into outer orbit.