Tesla in India: Which state will win the wooing game?

    According to a senior auto industry representative, if Tesla Motors wants to come to India, it has to come on our terms.

    Published On Jan 30, 2022 08:00:00 AM

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    Elon Musk-Tesla

    As states try to woo Musk, Tesla is still facing challenges to enter India.

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    Tesla Motors CEO, Elon Musk has been vocal about the high import levies prevalent in India’s auto industry. A recent tweet by Musk points to the challenges faced by the company – which explains the delay in its entry – which has prompted an absurd reaction by various states.

    • States try to woo Musk to set up shop
    • Elon Musk has been asking for a reduction in import duties
    • Questions arise if Tesla should get preferential treatment

    The West Bengal, Telangana, Tamil Nadu, Maharashtra, Punjab and Karnataka governments did not waste time in tweeting out messages that they were ready to lay down the red carpet for the San Francisco-headquartered electric carmaker. It was clearly a signal of fierce interstate competition to woo a top brand, reminiscent of the 1990s.

    It is different this time around with the auto industry in a greater state of maturity and ready to take on new challenges like electric mobility. It is in this space that companies like Tata Motors, Mahindra & Mahindra, Hyundai, MG Motor and Mercedes-Benz, having invested in electric mobility, did not get the kind of exalted attention accorded to Tesla, which is truly perplexing.

    As a senior representative of the auto industry said, “I just don't understand why India is so obsessed with Elon Musk. His coming to India is not going to make a difference except for a few hundred people who will buy a Tesla. If he wants to come to India, he has to come on our terms and not on his terms.”

    Poster boy

    It is a no-brainer that Musk is the poster boy of electric vehicles. Till he came along, the auto industry was in a state of absolute contentment with the strong guys raking it in and getting bigger by the day. Then Volkswagen was hit by the diesel scandal, which pretty much changed the dynamics of the game.

    This is when the lawmakers decided that enough was enough and Europe, in particular, has now gone the extra mile in enforcing strict emissions standards. Electric has become one of the top priorities and the same VW, which was the villain of the piece till not-so-long ago, has made enormous strides in this space.

    Yet, the halo that surrounds Tesla is only getting brighter because Musk was the first mover and clearly played a big role in disrupting conventional thinking. It is a moot point if a world without Tesla would have seen similar strides in EVs lately. There is no question that Musk has been the pivot of this change and it is this aspect alone that makes him such a charismatic figure coupled with the fact that his interests lie beyond auto in areas like space exploration.

    He is, of course, a businessman at the end of the day, and this explains why he continues to press for lower import duties if he has to set up shop in India.

    Viable model

    For Musk to justify the low volumes he is going to sell in India, his company obviously needs a viable business model, and the best way to go about it is to have an easier entry barrier without the burden of high taxes. It also makes terrific sense for India to have Tesla in its kitty, purely from a branding point of view. Elon Musk appeals to GenNext, and what could be better than that in a country where two-thirds of the population is under 30 years, even if most of them may not be able to afford a Tesla.

    Yet, is it fair to give the company preferential treatment when so many others have gone the extra mile in their localisation plans and even put out their models on the road? In all fairness, the Centre has not indicated if it will reduce duties further for EVs in a bid to get Tesla set up shop quickly. Other automakers, who have already earmarked investments in this arena, will not complain either, since any benefit is welcome. They, however, will wonder if this decision was propelled by the American brand.

    Where do the states come in?

    As for the states, they are as determined to go all out in the race for Tesla Motors. Eyebrows were naturally raised when West Bengal made a pitch for Tesla – given its past record with the Nano project. Tamil Nadu has also been advertising extensively in recent times on its intent to become an EV hub. Apart from Hyundai in the car space, Tamil Nadu's two-wheeler portfolio includes Ola Electric, TVS Motor, Greaves Electric and Simple Energy. Perhaps Citroen will also have an electric line-up at its Tiruvallur plant in the course of this decade. 

    The state is also keen to send out the right signals at a time when it is grappling with the crisis of giving the workforce at Ford an alternative livelihood.

    It remains to be seen which of these states will eventually end up bagging the Tesla mandate. Perhaps that is jumping the gun since Elon Musk will first have to decide if India is on his radar at all. Till then, the wooing game will continue in earnest.

    What are your thoughts on the circumstances surrounding Tesla's entry into the country? Let us know in the comments.

    Also See:

    Upcoming electric SUVs, cars in India in 2022

    Tesla Model X India review, test drive

    Tesla Model 3 India review

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