Tesla's India entry means more than just flashy electric cars on roads

After years of gridlock, hopes of Tesla's entry into India have been rekindled with a series of events that unfolded over the last few weeks. First, its senior officials flew to New Delhi to discuss with the Indian government the auto company's plans to set up operations in the country. Now, Tesla's CEO Elon Musk had a meeting with Indian Prime Minister Narendra Modi and he has confirmed that Tesla will invest in India as soon as possible. With this official confirmation from the Tesla CEO, its electric cars launching in India could be just a matter of days now.

No wonder, Tesla's latest confirmation about its India entry comes as very exciting news for the Indian automotive industry as well as for the global EV industry. Tesla has undoubtedly expedited the global auto industry's transformation towards electrification from conventional internal combustion engine technology. As Tesla is now ready to enter the Indian market, which is among the top four global automotive markets, it will be interesting to see how the scene unfolds here after its entry into this highly competitive and price-sensitive yet dynamic market.

The American automaker's presence here is likely to drive the transformation of the Indian automotive industry towards sustainable and electric mobility. There are a wide number of players already working on their respective electric vehicles in the Indian market. However, the Indian EV industry is still dominated by the two-wheelers and three-wheelers, while the passenger cars' share in the overall EV market pie here is much lower than their two- and three-wheeler counterparts.

Tesla's arrival in India could give the country's electric car segment a major boost. Since the EV manufacturer is aiming to build a local supply chain in the country, it will further develop the overall EV industry here, which may result in a boost to battery manufacturing, and battery technology development among other improvements for the industry. Another interesting point to see is how the existing electric car manufacturers in India react to Tesla's entry. Tata Motors currently holds the lion's share in the Indian electric car market, while Hyundai, Mahindra, MG and BYD are also present with their respective products in the mass market segment. In the luxury segment as well, brands like Mercedes-Benz, BMW, Audi, and Volvo have already introduced their electric cars in the country. Tesla's entry into India could force these automakers to change their strategy as well.

Speaking about the possible impact of Tesla's entry into the Indian market, Puneet Gupta, Director of S&P Global Mobility, said that the EV maker's entry will be a game changer for the Indian market. He believes the premium car segment in India which has been roaming between 1-1.5 per cent for decades, may finally swell. Gupta also hopes that Tesla may set a new benchmark for Indian consumers. “Tesla will be a benchmark as owning it will be an aspiration for many, but it will infuse a thought to own greener cars among Indian consumers and thus push towards electric cars in all segments," he said, further adding that Tesla may infuse energy and confidence in EV ecosystem players in India which is the need of the hour.

However, considering Tesla's history of overpromising and underdelivering, Volkswagen India's former marketing head, Avik Chattopadhyay believes that just a meeting between Elon Musk and Prime Minister Narendra Modi exchanging pleasantries is not the signing of an MoU. Referring to Tesla's demand for special deals to enter the Indian market, he said, “Tesla wants special deals to enter the Indian market. The govt has not fallen prey once. Musk will not come down from his horse. Modi has launched Atmanirbhar and PLI with much fanfare. The govt cannot be extra soft just because it is a big brand. Modi shall not risk coming down from his horse either."