Tesla's Entry to Indian Market on the Cards

Tesla CEO and electric vehicle guru Elon Musk's tweet saying that he hopes to make Tesla a presence in India by 2021 is making waves on social media.

In September, The Economic Times had reported that Tesla was in talks with the Karnataka Government regarding a possible research and innovation center in Bengaluru.

Earlier, Musk had hinted that regulations in India were too draconian to consider establishing a Tesla factory in the country. India's policies on localisation, taxes on vehicles and the heavy import tariffs on key components have been cited as the reason behind the reluctance in investment by various sources.

However, the government of India has now introduced several incentives for electric vehicles (EVs).- Tesla's main market - like an income tax deduction of around 1.5 lakhs on interest paid on EV loans as well as incentives to set up dedicated research and development centres around the country. Eleven cities have been shortlisted under the FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles) scheme which seeks to introduce EVs to public transport systems.

The Kerala state government is also set to introduce up to 250 new charging stations in a bid to promote EV usage. The state's first charging station opened in 2019 at Edappally, while a second outlet was opened in August 2020 at Thiruvananthapuram. More are being constructed under the "100-Day Plan" launched by the government.

Musk has also hinted that he may be establishing a new Gigafactory - for battery-production - somewhere in Asia, prompting renewed speculation as to whether India may be on the map.

The Indian automobile market suffered a heavy blow in 2019 with sales plummeting to alarming levels in August of that year.

Sceptics have also pointed out that the Tesla brand is a top-shelf luxury product which is entering the Indian automobile market that is heavily centred around the volume of production rather than exclusivity. The price point and the need for charging stations provide hurdles for successful market value.

While the brand attracts equal parts attention and controversy thanks to Musk, it remains to be seen whether this will be enough to kick-start an EV revolution in India.