The Indian automotive market offers around 1 million units annual volume opportunity at a price above $23,000.
Photograph: Kind courtesy, Makara Heng/Pexels
Amid increased buzz around Tesla’s entry into the Indian market, analysts feel that the US firm will have to price its models competitively, which is below $30,000 (around Rs 26 lakhs), to gain a good foothold on the country’s roads or volumes may be limited.
Talks around Tesla’s potential India entry have picked up after it advertised for retail positions in Mumbai last week.
In a recent report BNP Paribas analysts said that they expect Tesla’s entry into India to be “slow and measured” given the low average price point in the market.
Even if Tesla can produce and sell at as low as $30,000, it will be considered expensive for mass volume in India once 15 per cent custom duties are considered, the report said.
“In our view, local production won’t make sense unless Tesla can reduce the price to under $30,000 to allow for mass volumes in India,” the analysts said.
Tesla has also ended its true low-cost Model 2 efforts a year ago, with focus shifting to Robotaxi and robotics plans.
Tesla’s plans for a new “unboxed” assembly process and plant in Mexico have also been shelved as a result. The analysts thus don’t expect these plans to be revived for India.
“We expect Tesla to address India by exporting from one of its existing plants. This would limit volumes to very low levels for the foreseeable future,” they added.
Among the OEMs most at risk in that segment is Mahindra & Mahindra, BNP Paribas analysts felt.
“We do not see any material risk to M&M from the existing Tesla models and a new $25,000 model is unlikely,” they said, adding that last year MM’s stock corrected by around 9 per cent in two weeks on fears of Tesla’s entry. However, the stock recovered swiftly after that.
The average price of cars sold in India is Rs 11 lakh or $13,000.
“We estimate approximately 25 per cent of the industry volume to be of models sold above the price of $23,000 which would be the most at risk if Tesla launches a product below $30,000,” the report said.
The Indian automotive market offers around 1 million units annual volume opportunity at a price above $23,000.
“However, to capture this, the company will need a lower-priced model, preferably one that is priced below around $30000 and manufactured locally,” the report added.
Feature Presentation: Rajesh Alva/Rediff.com
