Consumer Discretionary

1.7 Tesla ➜ Road to India - Top Priorities

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<p style="text-align: justify;">India is a lucrative market, which is a big opportunity for Tesla and in coming years India can represent 10% of overall demand for Tesla, and the ongoing US- China trade spat, and China&rsquo;s questionable intellectual property regime increases India&rsquo;s relative attractiveness for Tesla.</p><p style="text-align: justify;">Due to the global pandemic most companies are re-looking at their operations, defining priority areas and accelerating the organizational changes towards focusing on core priorities and getting rid of distractions. Tesla on the other hand is entering the Indian Market after making so many speculations all these years, Tesla's stock prices are also very high. It helps to keep the investor sentiments high and hence entering in India fits very well now.</p><p style="text-align: justify;">Here are some <em><strong>Key Points and Top Priorities for Tesla in India - </strong></em>according to me to succeed -</p><ul style="text-align: justify;"><li>Environment impact is not very important factor in car buying decision, but Tesla being a Tech Savvy brand will attract the premium car enthusiasts and young generation entrepreneurs. Hence Tesla must bring the latest models and technologies to India. Reducing the current features or attempting to lower the costs by bringing older platforms should be avoided and must start therefore with their latest Model Y at first stage.</li><li>To start with, Tesla would have to import cars; this will certainly increase the cost of the car, which will make it a Rich Man&rsquo;s Leisure in the Name of Clean energy. Homologation as per Indian Roads conditions will lead to significant changes in the products, intern leading to jump in costs. Therefore, the probability of generating volumes will be very less and not justify localisation of the products for the time being. Thus, to get significant share in India, Tesla will need a more competitive pricing. This would be possible if&nbsp;duties for electric car imports&nbsp;go down. India had agreed to lower duties for known luxury two-wheeler company in, therefore Tesla should also try to negotiate a better duty structure for its cars in India.</li><li>Tesla will have to face huge speed breakers and bumps on the Indian roads. They have to make their cars adaptable to these road conditions. Moreover, the absence of clear lane markings on the roads could compromise Tesla&rsquo;s autopilot capabilities. India&rsquo;s lagging infrastructure and poor road conditions are not going to improve overnight. Though it seems that these features may work well on the highways, but unavailability of charging infrastructures as compared to that available in other markets may make it a low distance ride for the owners.</li><li>Tesla should plan to achieve a decent volume in top metros and get a head start in tier B cities in India for the time being. Because going all-out by appointing a lot of dealers without getting the business will raise viability concerns forcing the dealer to shut shop, thereby denting the brand.&nbsp;<em><strong>Online sales, backed up by service support</strong></em><em>&nbsp;is a good way to start.&nbsp;</em></li><li>To establish the product portfolio in India Tesla may have to collaborate with well-established service providers. For charging and electrification process they have to partner with one of the giants, for network handling and expansion digitally another partner. This may become a hurdle for them as the current environment is not as much advanced in India as compared to any other developed countries around the world.</li></ul><p style="text-align: justify;"><em>Surely, there will be many more opportunities and challenges coming up for Tesla and it will be successful if they take decisions quickly.&nbsp;</em></p><p style="text-align: justify;"><em><strong>When &amp; Why</strong></em><strong> </strong>- Tesla needs India. India needs Tesla, Tesla and India do appear to need each other.</p><p style="text-align: justify;">The government wanted the auto industry to accelerate EV switch over, the auto industry expressed helplessness at the total lack of a suitable ecosystem for the switch over and so the EV buyer did not have much choice for electric vehicle to buy or charge it and hence low demand.</p><p style="text-align: justify;">One of the critical points would be, setting up the charging infrastructure. Interesting to see how Tesla plans that out, as unlike any other country India has its specific set of challenges when it comes to setting up super-fast chargers or even the home chargers. There cannot be much scope to collaborate with other large car companies as Tesla as a company is very different vs other car companies in our country. Tesla may have to change their approach unlike Apple product so Apple charger, for their products.</p><p style="text-align: justify;">...Tesla will bring with itself not just high performance, technology-rich cars but will also drive business for others and build the missing ecosystem. If Tesla invests in a local manufacturing or assembly unit in India, various suppliers will tie-up for component supply contracts. Once that commences, it will boost the confidence of even other automotive manufacturers to develop electric vehicles who will be assured of consistent parts supplies. The missing EV buyer will thus have more options to choose from and more options would mean, greater scale of manufacturing and lower vehicle costs and greater demand....</p><p style="text-align: justify;">&nbsp;</p>
KR Expert - Rajiv Rawat