Hanoi. In April 2016, Elon Musk invited Indians to preorder the upcoming Tesla Model 3. Vishal Gondal was one of the first to sign up, paying a $1,000 deposit for a car that never arrived.

The founder and CEO of a health-tech startup called GOQii in India's financial capital Mumbai, Gondal wasn't sure when the automaker would launch in India or how much the car would eventually cost. But the Elon Musk fan was excited about the Model 3 and willing to wait.

In the eight years since Tesla's initial promise to sell cars in India, other automakers have launched their own EVs. But the American automaker has failed to follow through, apparently because of concerns that taxes would make the cars too expensive in India, combined with the difficulties of building an Indian factory if it decided to shift production away from China.

After six years without a Tesla or a clear explanation about the company's plans for India, Gondal bought an electric SUV made by German automaker Audi. He got his $1,000 back in January 2023 with the help of a friend who helped him track down a Tesla sales manager in India.

India is the world's third-largest auto market after China and the United States. But it's unique. The average price of cars sold in India in 2023 was $14,000, compared with $47,000 in the United States. An American can buy a new Tesla 3 for about $40,000. That's the price of a luxury car in India, and buyers would demand excellent after-sales service.

"I think Tesla may be a great tech company. But they just don't know how to sell luxury cars," Gondal said.

To woo automakers like Tesla while also protecting domestic carmakers like Mahindra and Maruti Suzuki, India reduced its import duties to 15 percent from 70 percent-100 percent in March 2024 for EVs cheaper than $35,000 — as long the automaker commits to building a factory in the country within three years.

Despite his earlier enthusiasm, in 2019 Musk expressed concern that import duties could double the prices of Teslas made in India, making them "unaffordable." Many in India expected Musk to announce plans for a factory there in April, but he canceled an expected trip at the last minute, citing "very heavy Tesla obligations."

India's growing auto market is dominated by its largest carmaker Maruti Suzuki, followed by South Korea's Hyundai Motors and India's Tata Motors. Electric vehicle sales doubled in 2023 but still made up just 2 percent of total car sales, according to market research firm Counterpoint Research. Of this, Tata Motors held more than two-thirds of the market, with Indian automaker Mahindra & Mahindra and China's BYD shares growing.

Tesla also would also have to build a charging network in India, given the relatively small number of EVs already in the market.

Musk said in a July earnings conference call that Tesla is boosting capacity at its factories and that its affordable car — a small model expected to cost around $25,000 using new generation vehicle underpinnings and some features of current Tesla models — was "on track" for delivery in the first half of 2025.

The company's plans for India remain unclear.


 

Add as a preferred source on Google +