Tesla's India plan focuses on abundant caution rather than impulsive courage

Time of India

a day ago

The Eagle has landed after years of waiting. For those who made the pre-bookings many years ago, their patience has been tested since the time their (pre-booking) amounts were refunded.
The Centre's patience has also been tested:
Tesla
was not confirming even after getting a favourable electric vehicle policy so tailor-made that some in the corridors of power informally refer to it as the '
Tesla EV Policy
'. The wait is finally over and we have the Model Y in flesh and blood in a Mumbai showroom with Delhi scheduled to follow soon too. Time for the early birds to draw out the booking amount!
As the company makes headlines even for its most routine actions, like advertising for service advisors in its workshops (a job posting that would go unnoticed if this was any other brand), the hype train is chugging along at full speed.
But was it worth the wait?
Tesla's triumphs and trials
Tesla's success in the US rested on two main pillars: human intuitive technology and a country-wide charging network. The intuitive technology, especially in the 'cockpit', made interacting with the car so seamless that at times it was even labelled 'distracting' for safe driving.
Tesla's supercharger charging infrastructure, which extends from the East Coast to West Coast in the US, removed range anxiety and made the decision to own a Tesla even more attractive. All of this, and the promise for newer technologies/ innovations to follow, made Tesla the most valuable automobile company in the world in terms of market valuation, even ahead of the OG players from the US, Germany and Japan.
However, nothing is permanent, as the saying goes. Tesla had its share of stumbles: some were self-inflicted and some were by competition catching up. Elon Musk's political involvements hurt sales not just in a polarized US political landscape, but also in Europe. At the same time, competitors, especially from China, learnt the tricks quickly to spice up their cabins and soon leapfrogged ahead of the Tesla juggernaut.
Testing Indian waters tactically
Some say this backdrop made Tesla take cognisance of the world's third-largest automobile market, India. They had to consider that Indian consumers and the automobile market were very different and unforgiving.
If one was to go by the Centre's Heavy Industries Minister, Tesla was not baited by the newly announced EV policy. Many describe it as 'old wine in a new bottle'. Nonetheless, it promises to make the imported cars' prices more competitive today (through lower import duties) if the importing carmaker pledges future investments in local assembly and commits to adding some local components within a specified time frame.
Tesla seems to have chosen the tried, cautious, and pragmatic route of testing waters first by importing completely built units (CBUs) and then taking the next steps based on the response. In some sense, this is a very different approach from what we have seen its risk-taking, brazen leader take in the past.
Looking at the launch product selected (Model Y) and its launch price, it becomes even clearer that the Indian business plan was made with abundant caution rather than impulsive courage. A back-of-the-envelope calculation suggests that a good 'profit cushion' is built into the customer sticker price.
This will likely not just used towards paying the high real-estate rentals for its upcoming Experience Centres but will also give them budgets for brand building aimed at the Indian consumer.
Obviously, this sticker price also includes the CBU import duties which pushes Tesla into the luxury car Market in India where 50,000 units are sold annually (a very small segment – just 1.25 per cent of total cars sold in India in 2024). A 5 per cent share of this luxury car market will mean an annual volume of 2,500 units though a more pragmatic estimate of 2 per cent looks more achievable which will mean an annual volume of 1,000 units.
Let us not forget, majority of Indian customers are value sticklers, not brand chasers.
The wait is over, but is India ready to make Tesla's delay look like perfect timing? Only time will tell.
(The writer is former President, Lexus India. Views are personal.)