[dgindia]

In the recent past few month we witnessed willingness by Tesla to set up a manufacturing plant in India for small electric car. It was proposed to conceptualise the EV to suit Indian conditions. Govt also tweaked its vehicle import policy to incentivise the investment.

But subsequently Tesla's India venture was put into back burner. It was reported Tesla is focussing on expansion in China.

This raises concern, if Tesla was even serious about its investment in India or used it as a bargaining chip for greater concessions elsewhere.

https://www.ft.com/content/8266a1a5-...1-d6a606704f3a

https://www.ft.com/content/a2104f00-...0-7a712d022f79

[bijims]

With the current slowdown in the automotive sector in India, and with China being a major target for Tesla, I guess India would have to wait, moreover, with the amount of taxes and the high prices for even the cheapest Tesla car currently on sale, Tesla definitely wouldn't do great numbers in India, For that they would have tod develop an EV for India, manufacture it here so and do some careful costing. This takes huge time and investment and Tesla at this juncture may have felt this was not the right time.

[Shreyans_Jain]

More than Tesla itself, it were the (mis)information minions that created the perception that Tesla is setting up a plant in India.

It is public knowledge that
1. Tesla has shelved plans for its small car
2. Their China gigafactory is right there next door
3. China car market is many times bigger than India, both in terms of volume and average purchase price
4. The segments that Tesla operates in, if we add the monthly volumes of all existing players, and then put a zero behind it, even then it would not be enough for Tesla to justify setting up a plant given the scale of their plants.

The brouhaha about Tesla’s India factory never added up.

[HillMan]

Yes they are seriously scouting for a manufacturing location outside of China. The govt in USA is looking at penalizing China for their support to Russia and also as a threat to themselves. Now that Tesla's sold in US are made in China, they will be directly impacted with the additional taxes and various regulations that will need to be complied.

Tesla will not move out of China for sure. For Tesla, China is an important market as well and cannot be ignored. They have a need to diversify.

Where ever they need to setup, it will be a Gigafactory. Tesla uses this massive investment as a bait to arm twist governments to agree to their terms. This is where center is in disagreement and wants a level playing field for all. Negotiations are continuing till a middle ground is found.

India also has an aspiration to be ahead in the EV race.

[Kishoreshack]

The taxes imposed by the Indian government are exceedingly high. How can we expect the automotive sector to survive under such pressure? How can we anticipate that Tesla and other major companies will choose to enter the Indian market? We have seen Mahindra and Tata stepping in to financially support consumers, who are already grappling with record-high inflation and a plummeting rupee.

The government should consider reducing taxes on vehicles. Currently, these taxes surpass those in many developed countries, leading some economists to label this situation as "tax terrorism." The middle class, who dutifully pay their taxes, receive little to no benefits each year.

The recent infrastructure failures, exposed by just a few hours of rain, highlight the inefficiency of our government. Indian car companies should unite and raise their voices against this tax terrorism.

[extreme_torque]

Originally Posted by HillMan

Yes they are seriously scouting for a manufacturing location outside of China. The govt in USA is looking at penalizing China for their support to Russia and also as a threat to themselves. Now that Tesla's sold in US are made in China, they will be directly impacted with the additional taxes and various regulations that will need to be complied.

Completely wrong. Tesla's sold in US are NOT made in China. Tesla already has two gigafactories in US to cater to local demand and for some coutries outside of US.

Originally Posted by HillMan

Tesla will not move out of China for sure. For Tesla, China is an important market as well and cannot be ignored. They have a need to diversify.

Tesla is already expanding their China capacity and more than half their world sales are from cars made in China. That does not sound like diversification at all. Another reason is the China is the world's biggest EV market as well with more than 50% share of the global EV sales. It would make perfect sense to expand in a country where the supply chains are already well developed and mature rather than risk a new country which neither has the expected sales volume nor the maturity or even the human capital required for such an endeavour.

Originally Posted by HillMan

Where ever they need to setup, it will be a Gigafactory. Tesla uses this massive investment as a bait to arm twist governments to agree to their terms. This is where center is in disagreement and wants a level playing field for all. Negotiations are continuing till a middle ground is found.

How is it a bait if the massive investment turns into an actual investment? Government around the world are too happy to have their arm's twisted for a Tesla investment, including India.

Originally Posted by HillMan

India also has an aspiration to be ahead in the EV race.

And like everything else this wont materalise. China has and will be the leader in EV's whether India, EU or US like it or not.

[HillMan]

Originally Posted by extreme_torque

Completely wrong. Tesla's sold in US are NOT made in China. Tesla already has two gigafactories in US to cater to local demand and for some coutries outside of US.

I stand corrected. Completely went off my mind. Thanks

How is it a bait if the massive investment turns into an actual investment? Government around the world are too happy to have their arm's twisted for a Tesla investment, including India.


And like everything else this wont materialize. China has and will be the leader in EV's whether India, EU or US like it or not.

Just because someone has a lot of money, does not mean they come in an trample over all indigenous manufacturers and start ups. Who have taken risk and invested heavily.

EVs are a new trend, the technology is going thru a phase and it has not yet reached maturity. This brings the legacy manufacturers and new players on the same level playing field. No one can prove above others in this tech, because all are nascent in their way. There are technology break thru happening all the time in this space. It could be in the space of material, processing or mass manufacturing. You never know what will click for the future.

[SmartCat]

Originally Posted by dgindia

This raises concern, if Tesla was even serious about its investment in India or used it as a bargaining chip for greater concessions elsewhere.

Only problem with this theory -> It pre-supposes that China is worried about India giving it competition in manufacturing.

So gents, you can't have it both ways. Make a blanket statement that Indian manufacturing of smartphones/laptops/EVs is no match for China, but in the same breath say that Musk squeezed out concessions from China by threatening to open a EV manufacturing plant in India.

[dgindia]

It pre-supposes that China is worried about India giving it competition in manufacturing

The post was to understand the rationale behind actions taken by Tesla with regard to proposed EV plant in India.
Not trying to get into geo-political space. Every country is free to sweeten the deal to incentivise FDI for benefit of their economy.

you can't have it both ways. Make a blanket statement that Indian manufacturing of smartphones/laptops/EVs is no match for China

Pls allow me to correct the factual position - No where in the post, have mentioned that Indian manufacturing is sub-par to another country.

[RMN]

I can't recall but was it Musk who started spreading this news? If yes, well he is known to overpromise, right? Tesla was looking into building a cheaper model and India plan would have fit it well - but I guess before things were finalized, Musk went off about it.

[Raskolnikov.R]

Originally Posted by HillMan

Now that Tesla's sold in US are made in China, they will be directly impacted with the additional taxes and various regulations that will need to be complied.

China is Tesla's second-largest market, and the hub for exports to Europe, not the US.

The US market is supplied by its Texas gigafactory.

Originally Posted by Kishoreshack

The taxes imposed by the Indian government are exceedingly high. How can we expect the automotive sector to survive under such pressure?

India, by the way, is the world's third-largest passenger vehicle market.

Taxes are indeed high in India. However, they have never been a major barrier to market growth. Pruning our taxes would help expand the base a bit, but I don't expect it to dramatically alter our automotive landscape.

You can rest assured the automotive sector is doing fairly well in our country. It accounts for 7.1% of the GDP and employs 19 million (direct and indirect) people.

Taxation demands rationalization, not renunciation.

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On a different note, Musk is notorious for reneging on deals. So, no deal is final, even after signing on the dotted line.

India was not, and can never be a major market for Tesla. Though the optics are necessary, our EV market is too minuscule at best.

Furthermore, we don't have as wide a SCM for EVs as China does. And all credit to China where it is due. They were browbeaten during the 2008 Beijing Olympics (anyone remember that?) and worked on creating the EV industry from scratch.

Musk believes, rightly or wrongly, that Tesla's future lies with automated vehicles. And for that, he needs China. China has advanced quite well in autonomous driving, thanks to a fairly young road network built with foresight.

I expect Tesla to build autonomous vehicles in China, and Mexico, and nowhere else.

India is unlikely to ever picture in the larger scheme of things.

[ferrarirules]

According to me, It was never Tesla which was overly interested in investing in India. It was more that government of India wanted an "Apple" moment. Like the Apple manufacturing in India was a big thing. They wanted the same "wow" moment with Tesla. Tesla was never a mass market product from an Indian context with their current lineup, it would have been a niche product like BYD Seal.

The only way they would have captured market is if they came with an India specific product. An idea which they have shelved for the time being.

[LMOO2]

Originally Posted by ferrarirules

According to me, It was never Tesla which was overly interested in investing in India. It was more that government of India wanted an "Apple" moment. Like the Apple manufacturing in India was a big thing. They wanted the same "wow" moment with Tesla. Tesla was never a mass market product from an Indian context with their current lineup, it would have been a niche product like BYD Seal.

The only way they would have captured market is if they came with an India specific product. An idea which they have shelved for the time being.

It was neither Tesla nor the government. It was an industrialist who wanted to venture into the EV space with the partnership of a global manufacturer. The industrialist has already ventured into the battery space and would require partnership to sell their batteries. I would say the lowering of EV demand across the world was the reason for the exit of Tesla and our Indian industrialist didn't think it as a profitable option. Since the Government of India had also showered some EV import as well as manufacturing benefits just for Tesla to enter the Indian market. MG, BYD and Vinfast will now enjoy the benefits which were meant for Tesla.

[Briarean]

As I had mentioned previously on a similar thread:

1. Tesla is American and they have seen the failure of GM & Ford and the pathetic performance of Jeep, here in India.
2. Building a factory (not giga-factory) itself will cost 2-5 billion $, I think. Even if they want to produce cars for left-hand traffic (right-side steering), there is only a handful of markets where they can export. For the rest of the world, they have China. That means, even to get a break-even point, they have to wait years.
3. Their business model is to have company-owned company-operated dealerships, service centers, and even the proprietary charging infrastructure. This vertical integration will be a tough challenge here in India.
4. Elon Musk is a tough negotiator, and he does not want to build cheap cars and destroy the Tesla brand. Tesla will be a luxury and state-of-the-art brand. So he knows that a car with a price tag north of 75 lacs will not set the sales chart on fire here.
5. Elon will arm-twist to have his Powerwall, solar & battery manufacturing, and Starlink here in India before any plans for car manufacturing. This needs less investment and ROI is excellent if priced right.
6. He knows that Tesla does not need India and India is not crazy for Tesla. Moreover, as China’s economy is not in good shape, they will provide him with enough incentives to be profitable there. China does not want Tesla to come to India as this will hurt China’s ego. USA’s issues with China are only with cutting-edge technologies, like AI Chips, Military tech, etc.
7. As the American election process is going on, he will wait and see if his favorite candidate Trump is going to be the president or not. He will get better leverage if Trump becomes the president.

So, all in all, let's not expect much apart from some cheeky lines from both sides…

[arunrajk81]

Originally Posted by HillMan

Yes they are seriously scouting for a manufacturing location outside of China. The govt in USA is looking at penalizing China for their support to Russia and also as a threat to themselves. Now that Tesla's sold in US are made in China.

Tesla cars in USA are not made in China, instead some components are. Its Canada who gets the made in China Tesla