Tesla is coming, but buyers deserve a wider choice

Tesla is entering India with new showrooms and service centres, taking advantage of the country's EV import policy. This policy, offering lower duties for premium vehicles, has spurred Tesla's move despite concerns about its impact on the market.
Tesla (Photo | AP)
Tesla (Photo | AP)

Tesla is finally coming to India. The electric vehicle pioneer is scrambling to set up plush showrooms and service hubs in big cities; and it has begun producing right-hand-drive vehicles in Germany to serve the Indian market. Tesla is an iconic brand that has been a global leader in building not only EVs but upstream sustainable energy options like solar plants and advanced rechargeable lithium-ion batteries.

It is no wonder the Indian government has been keen on wooing Tesla’s chief, Elon Musk. Negotiations for the car maker had, however, hit a wall as the completely-built units it wanted to import attracted 70-100 percent duty, which would make the cars unaffordable.

Things have suddenly changed. Tesla, which was dragging its feet earlier, is now in a hurry to drive into India. Its recent poor performance in global markets has contributed in no small measure to this change of gears. Falling sales and an intensifying price war has forced the car maker to lay off more than a tenth of its global workforce.

The company’s stock, too, has fallen 31 percent so far this year, even as traditional auto companies such as Toyota and GM have fared far better. India’s new EV import policy, introduced last month, has been a shot in Tesla’s arm. The policy now allows imports at a knocked down duty of 15 percent on vehicles costing $35,000 and above, as long as the importer invests half a billion dollars in setting up manufacturing facilities in India.

The government has been at pains to point out that other auto companies, including those from China, can also import cars under the new policy. However, by making the lower duty applicable only to the premium segment priced $35,000 (Rs 25 lakh) and above, it is hardly a secret for whom it is tailored.

The government has tried to protect Indian auto companies in the economy segment; but in the premium class there are competitive global models—from Volkswagen and Polestar to BYD—that should also have easier entry. It will give Indian consumers a wider premium choice. Moreover, this is the first time auto investment has been linked to concessional imports. Tesla’s cheapest cars—Models 3 and Y—will cost Rs 30 lakh and Rs 45 lakh, respectively. We are talking about a very small, very rich segment; and very few cars. Is the concession worth it?

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The New Indian Express