In April 2016 Elon Musk extended an invitation to Indian customers to preorder the much-anticipated Tesla Model 3. The excitement was high with many including Vishal Gondal paying a $1,000 deposit to secure their car. However eight years later the promise remained unfulfilled leading many Indians like Gondal to asked for a refund from Tesla.
Vishal Gondal who is the founder and CEO of the health-tech startup GOQii was among the first Indians to preorder the Tesla Model 3. He was thrilled about the new car even though Tesla had not disclosed when it would launch in India or how much it would eventually cost. Despite his enthusiasm years passed without any updates from Tesla. By January 2023 after six years of waiting Gondal finally managed to get his $1,000 deposit refunded due to a friend’s help in contacting a Tesla sales manager in India.
The Evolving Indian EV Market
India is the third-largest auto market in the world following China and the United States. However the market in India is unique with the average car price being around $14000 compared to $47000 in the United States. The Tesla Model 3 which is priced at about $40000 in the U.S. is considered a luxury vehicle in India. This makes it difficult for Tesla to compete without providing excellent after-sales service.
Many other automakers have already launched their electric vehicles (EVs) in India. Gondal, who initially waited for Tesla bought an electric SUV from Audi which is a German automaker. He believes Tesla may be a great tech company but they do not understand how to sell luxury cars in India.
Options for Indian Consumers
Other Indians customers who pre booked the Tesla Model 3 have also asked for refund. Hemant Suthar who is a Mumbai-based director of a design studio was another early Tesla customer. He eventually got his money back in 2023. Suthar believes that Tesla’s minimalist design might struggle to compete with the more luxurious EVs now available in India.
To attract companies like Tesla India reduced its import duties for EVs priced below $35000 from 70%-100% to 15% in March 2024. However this reduction comes with a condition. The automaker must commit to building a factory in India within three years. Despite this incentive Elon Musk expressed concerns in 2019 that high import duties would make Tesla cars too expensive for the Indian market.
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Tesla’s Global Challenges
Tesla’s global challenges add to its difficulties in India. The novelty of electric vehicles has worn off and competition has intensified. Tesla has built factories in China, Germany, and the United States but its sales have slowed. In the first half of 2024 Tesla sold 831,000 vehicles worldwide falling short of its target for the year.
To stay competitive Tesla needs to introduce more affordable models especially in emerging markets like India. However Tesla faces stiff competition from Chinese automaker BYD which has been selling EVs in India since 2008. BYD offers both affordable and premium EVs making it a strong contender in the Indian market.
The Road Ahead for Tesla in India
India’s auto market is dominated by Maruti Suzuki, Hyundai Motors and Tata Motors. Although electric vehicle sales doubled in 2023 they still only account for 2% of total car sales. Tesla would need to price its cars competitively, likely around $30000 and build local manufacturing and charging infrastructure to succeed in India.
The company’s plans for India remain uncertain. Rajesh Kumar Singh who is the head of the Indian agency for promoting industrial growth mentioned in a TV interview that the key Tesla executive they had been in contact with was no longer with the company. This leaves India in the dark about Tesla’s future in the country.
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