- Tesla has become more than a company that spews out slightly different products in regular intervals
- Tesla has created a much stronger sense of urgency in the matters of sustainability and environmental care than any other single company ever did
- Tesla senses that the Indian market is wide open to electric vehicles – small or big, two or four wheelers – and they are quick to act
Elon Musk had often expressed a desire to set up a business in India. And with the registration of their firm in Bengaluru, it looks like setting up a Tesla manufacturing plant in India is finally coming true! Tesla Motors India and Energy Private Limited had set up their offices only last month, which gave rise to speculations abound.
India has always been good with manufacturing, there is no doubt about that factor. The availability of skilled labour and engineers, availability of land and raw materials, and ease of freight access and connectivity to the west via the Suez canal have all played positively for “make in India”. More and more global giants are getting interested in investing in Indian manufacturing today. And now, Tesla has graced us with its glorious presence.
So, what does all that mean? Did Tesla just give the green signal to the rest of the world’s major manufacturers who were still on the fence? It certainly looks that way!
Tesla Coming to India in 2021
When Karnataka Chief Minister BS Yediyurappa has officially announced that Elon Musk’s Tesla will set up an electric-car manufacturing unit in Karnataka, it immediately set off an explosion of excitement. From the grassroots to the brains in the Indian manufacturing industry, all had celebrated the news in January 2021.
Though we are raring to know where the Tesla showrooms in India, it is still way too early to say anything of that kind. All we know is that Musk is starting by opening a research and development centre in Bengaluru, Karnataka. For this, Tesla has registered two company subsidiary ownerships – Energy Private Limited and Tesla Motors India.
Scarce little more is known about the eccentric billionaire’s expansion to India, except that Musk officially indicated on Twitter that Tesla will be opening the manufacturing plant in India sometime around next year. Also, when blogs asked about how he’s thinking about dealing with the high costs of the Tesla EV’s from an Indian backdrop, Musk simply replied, “As promised” – faithful to the hilt to his enigmatic nature.
If social media is any indication, Indians in all spheres have been very enthusiastic about this move by Elon Musk. Even last week, Union Minister Nitin Gadkari welcomed Tesla with open arms. “…It will be a golden opportunity for them to start manufacturing facility in India because as the automobile components are concerned, already Tesla is taking a lot of components from the Indian manufacturers,” Gadkari pointed out.
Not only the availability of raw materials and components, but India is also taking some great steps to entice foreign business in Indian manufacturing today. For example, India plans to offer $4.6 billion USD (€3.80 billion) to any company setting up battery facilities here.
Not only that, India has been actively trying to cut down on the dependency on oil and reduce pollution by several factors. Unfortunately, these efforts are being hampered by a lack of faith from investors in electric vehicle and infrastructure manufacturing. But with Tesla coming in (finally!), all of that is surely about to change.
We all wait eagerly for the first Tesla Model 3 sedan to roll out directly onto Indian soil.
Tesla the Influencer
In spite of being younger than many of its competitors, Tesla has a greater impact on the electronic vehicle industry. Its visions of pollution-free cities, self-driving vehicles running on renewable energy, etc. have captured the heart of the general populace while being just as compelling to the automakers.
Model 3 deliveries in Europe pic.twitter.com/fiBNp2a6pG
— Tesla (@Tesla) April 1, 2021
Tesla has become more than a company that spews out slightly different products in regular intervals. The name, “Tesla”, has become attached to the future of mankind – and who can resist that kind of influence? From the looks to the features to even the target demographics, auto manufacturers of today are struggling to keep up with the trendsetter Tesla.
Comparable to Apple and Google, Tesla has been synonymous with advanced technology that radically changes the consumer’s life. A user of a Tesla EV firmly believes that they are using just another isolated product – they believe in the vision that comes with the product, they believe in the creed, they believe in the mantra!
This goes a long way in explaining why Tesla, being just a child in comparison, is still more valuable than that of the big players in the automobile industry. Its market capitalization ($56 bn) is better than even that of Ford Motors’ ($42 bn), and is in hot pursuit of GM ($58 bn). These two giants are both much older, more well-known, and certainly better at car manufacturing.
And yet, Tesla is the name that shines.
World’s biggest die casting machine pic.twitter.com/MegnFPKQfh
— Tesla (@Tesla) February 5, 2021
The trick behind this – or, shall we better say, the ideals, are simple. Tesla has created a much stronger sense of urgency in the matters of sustainability and environmental care than any other single company ever did. You certainly won’t find most of those old, revered automakers dump a basketful of high-tech high-cost chips in a vehicle that is generally lesser in performance and prohibitive in price, “just to save some trees”, as it were.
But Tesla did it and did it beautifully – so much so, that the world had to fall in line. And then the question arises, what does all of that mean for us, now that Tesla has launched in India?
Tesla and Ease of Doing Business in India
As we have just discussed – Tesla is THE name in the EV manufacturing industry. And when such a giant as Tesla decides to invest in a particular location for a manufacturing plant, it is not lightly taken by the other vehicle manufacturing giants. There are two main ways the manufacturing sector in India will be influenced by Tesla’s decision – market-wise, and by the government’s initiatives. Let us strike these points one by one.
It is not like that India is not trying to rise up on its own in the EV manufacturing sector. We have veteran players like Tata Motors, Mahindra Electric, Ashok Layland, TVS, Bajaj, Hindustan Motors, and Hero in the EV landscape. But so far as actually capturing the market, none of them has been exactly successful at it. Even that would be an understatement.
The reason behind that is not that we don’t like EVs. Indeed, among Indians, there are probably more environmentally conscious people than in the western part of the globe. But the issue here is the lack of charging infrastructure, and the prices of electric vehicles that are still above the capabilities of the common folk.
The market researchers at Tesla are not sleeping; they must have figured out this gap and jumped in. Tesla senses that the Indian market is wide open to electric vehicles – small or big, two or four wheelers – and they are quick to act. As a developing country of over a billion, we must have enough buyers here to entice Elon Musk to have business with us.
The other automakers will think along the same lines, and in all probability, they will react in similar ways too. It is very possible that India is about to see a major influx of investment in electric vehicle manufacturing, today or tomorrow.
All of this must be very exciting to the other auto manufacturers. If Tesla is the first one to capture the Indian EV market, then it would become quite hard for other companies to make a dent there, since Indians value known brands immensely. So, if they want a share in this huge market, they have to move fast.
And that’s not all.
Stamping Model Y body parts at our Fremont factory pic.twitter.com/qbLrYowJRC
— Tesla (@Tesla) January 24, 2021
This is still speculation, but it is possible that Tesla may open just an assembling plant in India in the beginning, instead of making a gigafactory that’s pretty much self-sufficient. In that case, Tesla will need to get all the raw materials and prepared auto parts an EV needs – from sources very near.
In other words, it would be a boon to Indian auto parts manufacturers! It is indicated clearly that in order to cut down on your costs and equalize your product to the Indian market purchase power, one has to source locally as well. So far, the following businesses hold sway in the Indian auto parts market – JBM Auto, Hindustan Copper, Graphite India, Greaves Cotton, Tata Chemicals, Vedanta, Himadri Speciality, Exide, and Amara Raja Batteries. Surely, many of them will get a lot of business from the tech giant.
Government Initiatives: Inviting Tesla to India
Ever since 2015-2016, India has opened its doors towards electric mobility and clean energy. In 2015, PM Narendra Modi has visited Tesla to urge them to come to India and to impress upon them the value of doing business in India. There has been a rumour that Tata will team up with Tesla to develop a nationwide charging grid here (however that has faced some issues and isn’t moving forward now).
Furthermore, this effort is not limited to Tesla only. Pushing the Atmanirbhar Bharat move, the appeal goes to any automaker or auto parts manufacturer who can come to India with their business. For example, Hyundai has been enticed to produce their Kona EV here, and the same goes for Triton AV. And as we have mentioned before, the Indian government has promised to shell out $4.6 billion for anybody setting up an electric support industry here.
These efforts and much more has been received positively by external industry leaders if their social media activities are any indicator. The Indian automobile industry is expected to become the 3rd largest in the world in just a couple of years. And as the future is sustainable energy, getting an early foothold in a hitherto virgin territory seems paramount to business strategy for car and car parts makers.
Adding to the game is the shared mobility stakeholders, who would rather rent out than sell. In a country where quite a small part of the populace can afford to have a car (compared to the one-car-per-5 as of the western countries), shared mobility seems to be a more useful option to be investing in private vehicles.
Wrapping Up
However, all of that good intention and expectant markets would mean nothing for the EV manufacturers in India, if there are no proper charging stations around. This goes without saying, that proper charging stations within a reasonable distance (not only in every gas station) from each other. By common estimate, we have the ability to set up around 2 million EV charging stations by 2030. By that time, we’ll have around 1.5 million private EVs rolling on the road.
The future couldn’t come sooner! I for one am very excited about Tesla’s new manufacturing plant in India – even before its precise location has been declared. Definitely, Tesla has made it easier for other, smaller investors to decide how easy it is to do business in India. Hopefully, this move will push other manufacturers and carmakers to rush in, transforming the whole Indian automobile industry landscape.
