Tesla In India: Local Manufacturing, Sub-Rs 25-30 Lakh Pricing Needed, Says CLSA
CLSA does not believe that the Elon Musk-owned EV major will have a significant impact immediately on Maruti Suzuki India, Hyundai Motors India and Tata Motors.
Elon Musk-owned electric vehicle major Tesla Inc., which has hinted at India entry plans through fresh recruitments, will require domestic manufacturing and pricing of less than Rs 25-30 lakh to scale up in the South Asian economy, according to a note issued by CLSA on Friday.
The average selling price of cars in India is $14,000, or Rs 12.13 lakh, whereas the cheapest Tesla model in US is sold at $35,000 or around Rs 30.3 lakh, the brokerage pointed out.
Also, India's EV penetration stands at an estimated 2.4%, which is far lower than Tesla's two major markets — China, where it stands at 30%, and the US at 9.5%, it added.
Furthermore, Tesla also faces a challenge from the car import duty in India, levied at 60% for models priced less than $40,000 and 110% including agriculture cess for models above $40,000, CLSA noted.
In this backdrop, "we believe Tesla would need to establish manufacturing in India to scale up with its current portfolio and price its vehicles at less than Rs3.5-4m (Rs 35-40 lakh) on-road, even if import duties are reduced to sub-20% levels", it stated.
Tesla's Impact On Local Carmakers
CLSA believe that Tesla's entry "would not have any significant impact" on Maruti Suzuki India, Hyundai Motors India and Tata Motors, as penetration of India of EVs in India is comparatively lower than in China, Europe and the United States.
If Tesla positions itself with Model 3 at an on-road price that is 20-50% higher than models like Mahindra XEV 9e, e-Creta, e-Vitara etc, then it "would not significantly impact domestic EV models", the brokerage said.
If Tesla launches an EV at a price of $25,000 (Rs 21.6 lakh), then the features and specifications would be "meaningfully compromised versus its traditional models", according to CLSA. Therefore, Indian carmakers offering compelling features and competitive pricing do not face any significant threat by the Elon Musk-led company's entry into the local market, it further said.
Even if the import duty is revised to 15-20%, the price of Tesla cars would still be higher than most of long electric SUVs offered by domestic players like Maruti Suzuki India, Mahindra & Mahindra, Hyundai Motors India and Tata Motors, the brokerage noted.
