The Fear And Greed Around Tesla’s India Drive

The buck stops at 7 LKM for Tesla’s passage into India. That has auto stocks in a tailspin.At least three central government ministries—including those of industries, finance, and commerce—are hard at work, hammering out the modalities of the ‘Scheme to Promote Manufacturing of Electric Passenger Cars in India’. The guidelines are likely to be published in a week’s time, people within the heavy industries ministry tell me. The final draft is with the prime minister’s office now.First introduced nearly a year ago to no takers, India’s EV policy is seen as the pathway for Tesla Inc.’s entry into India. The biggest hurdle, of course, is tariffs. Here’s what the modified EV policy is likely to contain:A concessional import duty of 15% on electric cars priced $35,000 or higher for five years, against an initial investment of $500 million. The current tariff is 110%.The cap on electric cars imported under a concessional tariff policy can be raised from 8,000 to as many as 50,000 vehicles annually.An assets turnover ratio of 2.5, which means that an investment of Rs 4,150 crore has to produce a revenue of Rs 10,500 crore within five years. Carmakers will have to show a turnover of Rs 2,500 crore by the second year, Rs 5,000 crore by the fourth year and Rs 7,500 crore in the fifth year.New assembly lines at existing factories can be set up, but the initial investment cannot be for acquisition of land and construction of a building on the premises.Spending for charging infrastructure is capped at 5% of initial investment.An increase in the import quota and a more favourable tariff structure may reshape Tesla’s long-term plans for one of the world’s largest auto markets. Tesla could use the growth—its worldwide vehicle deliveries fell last year for the first time in more than a decade—as BYD Co. pulled further ahead in China and sales slumped in Europe..Tesla's India Debut: Model Y Launch Set For Second Half Of 2025.To be sure, according to last year’s iteration of the EV policy, the concessional tariff is on completely knocked-down units and not on completely built-up units—which is the route Tesla is taking to enter India.Still, I reached out to Maharashtra, Gujarat and Tamil Nadu—states that are most likely to host Elon Musk’s car company.Most sources are tight-lipped on any likely negotiations, but indicated that any lobbying, if at all, is happening with New Delhi and not at the state level. Yes, they are ready for Tesla, but not a lot can be said at the moment.While Gujarat can lure Tesla with its EV tax breaks, “ease of doing business” and a vast land bank near Ahmedabad, Maharashtra boasts of a mature EV ecosystem centred on Pune and proximity to a thriving port in Mumbai. Tamil Nadu, where Hyundai, Renault-Nissan and Ford have operated for decades, is quickly emerging as a manufacturing hub for exports..It’s to do with technology. Tesla, wherever it sets up shop, builds an entire ecosystem around its electric cars. That includes sourcing of high-grade local components, battery manufacturing and charging infrastructure. The technology transfer works. That, in turn, would bolster India’s positioning in the global manufacturing supply chain. That’s crucial from the point of view of ‘Viksit Bharat’ by 2047.Secondly, Tesla in India would indicate that the local EV ecosystem is mature enough to absorb a company of Tesla’s size. Yes, electric car sales are growing at a fast clip, but the penetration is nowhere close to 30% aimed by 2030.Finally, there are brownie points to be earned with US President Donald Trump, which sees India as a “tremendous tariff maker”. A reduction in EV import duty gives India the wiggle room to negotiate a broader trade deal with the US and thwart reciprocal tariffs..Tesla In India: Local Manufacturing, Sub-Rs 25-30 Lakh Pricing Needed, Says CLSA.But Indian automakers aren’t enthused. At least their investors aren’t.On Friday, when news of a rework of India’s EV policy first emerged, Mahindra & Mahindra Ltd. shares fell 6.2%, while Tata Motors Ltd. and Hyundai Motor India Ltd. stocks dropped 2.5% and 3.5%, respectively. They have recouped some of the losses since then.Analysts, however, differ on Tesla’s impact on Indian automakers.According to HSBC, an EV policy tailored for the likes of Tesla would be unfair for the incumbents, as it is favourable for imports from a tariff standpoint. That would hit the ICE cars immediately, as they are taxed as high as 50% in India. Granted electric cars attract GST of just 5%, but it’s still a nascent business for most local carmakers.Citi sees heightened competition from the likes of Tesla translating into pricing pressure for local carmakers, thereby eating into their margins. That would also have a bearing on their valuations.But the cheapest Tesla car would still be pricier than what mass-market incumbents have on offer. Despite the tariff revision, a basic Tesla Model 3 would still cost about Rs 35-40 lakh in India, while a feature-loaded Mahindra XEV 9e tops out at less than Rs 30 lakh. The average selling price of cars in India is about Rs 12 lakh at the moment. Most electric cars are priced below Rs 20 lakh.Breaking into India’s car market is easier said than done. Tesla’s US peers, Ford Motor Co. and General Motors, have learnt that the hard way. Still, one must keep in mind that the automotive industry is undergoing a seminal shift for the first time since the car was invented. That’s upending markets globally. India can be no different..Honda Motorcycle Expands BigWing Footprint, Opens Showroom In Chennai.India’s EV Race With China Depends On Trains: New models may get EV penetration up to American or European levels of 10% to 25%, but to follow China’s 45% lead, subsidies or tax rebates won’t be enough, writes Bloomberg’s Andy Mukherjee.Tesla, A Passage Into IndiaMaruti Suzuki’s Five-Year Plan: Suzuki has grand plans to make in India for the world, but Maruti Suzuki’s rivals at home are snapping at its heels. Still, the company is confident of regaining 50% share in the world’s third largest car market. .Creditors have approved a debt-restructuring plan proposed by KTM AG, in what can be seen as a lifeline to the Bajaj Auto Ltd.-backed Austrian bike maker.KTM has to deposit a cash quota of 548 million euros, equivalent to 30% of creditors' claims, with the restructuring administrator by May 23, according to an ad-hoc news announcement on the company's website on Tuesday. The bankruptcy court will then confirm the restructuring plan in the beginning of June..In the meanwhile, KTM will use the 50-million-euro loan extended by Bajaj Auto to resume production at Mattighofen, Austria. The planned full capacity utilisation of the four production lines in single-shift operation is to be achieved within three months..Kinetic Group Forays Into Battery Manufacturing With Rs 50 Crore Investment

The Fear And Greed Around Tesla’s India Drive

The government is working overtime to tweak India’s EV policy—seen as a pathway for Tesla’s entry into India. That has Indian automakers shook.

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The Fear And Greed Around Tesla’s India Drive

The government is working overtime to tweak India’s EV policy—seen as a pathway for Tesla’s entry into India. That has Indian automakers shook.

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