Tesla, the largest electric vehicle manufacturer has inaugurated its first showroom in India in Mumbai Bandra Kurla Complex (BKC).
Tesla, the world’s largest electric vehicle maker, is finally taking the plunge into India’s market with its first-ever showroom inaugurated in Mumbai high-profile Bandra Kurla Complex (BKC) alongside another in Delhi’s Aerocity. The company is setting up its retail and experience centers in some of the most premium commercial locations in the country. The plan to open these showrooms comes after years of delay and a recent meeting between Prime Minister Narendra Modi and Tesla CEO Elon Musk in the United States.
Showroom Details
The Tesla showroom located at Maker Maxity in Mumbai, BKC, happens to be over 4,000 square feet in size and is located on the ground floor of a commercial tower. The deal is one of the highest rents in India’s auto industry, with Tesla set to pay around ₹900 per square foot for an office space of around 40,000 square feet, working out to nearly ₹35 lakh a month. In comparison, the Aerocity showroom in Delhi will be 4,000 sq ft large, with monthly charges of ₹25 lakh. Both sites were chosen well to serve the top-end customers in their respective cities.
Business Strategy
The first part of Tesla’s strategy in India is to sell electric vehicles imported into the country from its factory in Berlin. The company, however, is yet to commit to local manufacturing in India, but the move to increase the sourcing of components from Indian suppliers is on the anvil with estimates pegging the sourcing to surpass $ 1 billion by 2015. Tesla is also considering launching an affordable electric car for under $25,000 (about ₹21 lakh), which would be among its cheapest models on sale around the world.
Market Competition
The launch of Tesla products will further increase competition among local players such as Tata Motors, Mahindra Electric, and MG Motor, who all are scaling up their EV output. But the extreme import duties on electric vehicles in India, which are currently just shy of 100%, make life harder for Tesla. Musk has been vocal about tariff cuts, but Indian automakers have opposed such efforts, arguing that loser competition could hamstring the local EV ecosystem.
Government Policies
India’s federal EV policy has undergone several revisions recently to encourage investment in the sector, hitting foreign automakers harder unless they create local plants. These measures are not enough to lift the barriers, however, even as Tesla’s longstanding call for reduced import duties remains a key hurdle. Car manufacturers like the company are focusing on imported EV sales on their favoring policies while they will consider local manufacturing.
Hiring and Expansion
After Musk met with Modi, Tesla applied to job postings in India for 13 mid-level positions, like store managers and customer relationship executives. Tesla’s effort urged a strong entry of talent to the Indian market. Its big commercial potential — it is the second largest market for passenger cars in the world — is one to reckon with. The company’s entrance into India is part of its larger approach to dominating emerging markets as it faces international rivals from Chinese electric vehicle (EV) makers.
Future Prospects
Tesla is expected to bring the Model 3 (currently its entry-level car globally) to India when it opens its books within domestic shores. There are also rumors of a new, cheaper model, potentially the Model 2, which would be a downmarket version of the Model Y crossover. On the positive side, Tesla stays upbeat on India’s vast potential and expects its huge growth to aid its desire for EVs, combined with government interest in promoting a cleaner environment.
Global Context
Tesla’s international expansion has been challenged by growing competition from Chinese competitors and by an overall slowdown in EV sales. Bathed in loss, the goal of the Indian market may well be the redeeming Kindle for Tesla to renew its soaring. Tesla aims for a wide range of its own to leave a lasting national footprint while working toward India’s dream of becoming a hub for electric vehicle production and development. With Tesla’s entry into the market, it will be exciting to see how things unfold going forward, as the Indian EV space is still in its infancy.
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