The Indian government has enthusiastically rolled out a policy aimed at attracting EV makers like Tesla. However, the Elon Musk-led automaker has remained non-committal about its plans to enter the Indian market. People familiar with the situation told Moneycontrol that Tesla has not conducted any significant studies or held detailed discussions with state governments in India yet, signaling a lack of immediate intent to establish a manufacturing presence in the country. Tesla’s lack of communication with its suppliers in India also signals that the carmaker does not have an immediate plan for India, although it has registered a company in the country. Moneycontrol also learns that Tesla has not moved towards contacting state governments or suppliers for setting up its all-important Supercharger infrastructure in India, which is crucial for the sale and adoption of Tesla’s electric vehicles in the country. “Moreover, Tesla’s approach to its India entry is markedly cautious compared to other automakers like VinFast, who have rapidly moved into the Indian market even before the announcement of the new policy,” said a senior industry executive familiar with the plans of both the companies. Vietnamese EV maker Vinfast has already begun construction of a battery and vehicle assembly plant in Tamil Nadu. “Their strategy is different from Tesla. Like Tesla, Vinfast is also going through its share of global challenges but the difference in approach is evident,” this executive said. Tesla didn’t reply to Moneycontrol’s queries emailed on Tuesday. An exit, and a new plan While representatives from Tesla have visited sites in multiple locations in India, with states like Gujarat, Maharashtra, and Tamil Nadu as potential front-runners due to their existing EV ecosystems, aggressive subsidies, and availability of ports, the company hasn’t followed through with detailed proposals or discussions yet. Musk, Tesla’s CEO, known for his unpredictable management style and frequent shifts in business strategy, has further fueled uncertainty about the company’s India plans. Recently, Musk chose to prioritize leading an investor call and a board meeting over a visit to India, amid a period of declining global sales for Tesla. Coincidentally, Tesla’s vice president of public policy and business development, Rohan Patel, who was leading the company’s negotiations with the Indian government, resigned shortly after. However, Patel’s exit could also have been due to a planned organization restructuring for the ‘next phase of Tesla’s growth’, in which he was being offered a new role, Moneycontrol learns. Moneycontrol, however, didn’t receive a response from Tesla confirming the reasons for Patel’s departure. However, people familiar with Tesla’s plans for India suggest that Musk’s cancellation of his visit also hinted at a possible dissatisfaction with the current terms of the new EV policy or the overall investment deal. Tesla’s current plans to optimize its current capacity and production lines doesn’t leave it much room to make a new investment in India just yet, these people said. A strategy misalignment Tesla’s global ecosystem partners suggest that establishing a manufacturing facility for Tesla in India would take up to three years, by when the size of the country’s EV market would be much larger. Sales in India’s electric passenger vehicles surged 91% to 90,996 units in the 2023-24 financial year from 47,551 in the year prior, as per data from the Federation of Auto Dealers’ Association of India. Contrary to local reports in India that suggested that a new $25,000 Tesla car might be manufactured in India, sources within Tesla’s ecosystem maintain that the production was planned for the company’s Texas gigafactory. Further, Musk has emphasized Tesla’s identity as an artificial intelligence and robotics company rather than as just an automaker. “If somebody doesn’t believe that Tesla isn’t going to solve autonomy, then they should not be an investor in the company,” he said. Musk’s recent focus on autonomous taxis (Robotaxis) suggests a strategic diversion that may not align well with the current technological and regulatory landscape in India, where such innovations are still in nascent stages. Wait and watch On 15 March, India announced its New Electric Vehicle Policy 2024 to promote the country as a manufacturing hub for EVs. Under the new policy, EV makers would be allowed to import up to 8,000 vehicles a year at a lower customs duty of 15% if they committed to setting up local manufacturing at an investment of at least $500 million in India. The announcement came just a day before the model code of conduct kicked in ahead of the national election. Musk was reportedly scheduled to visit India on 21-22 April but cancelled the plan a day before. Earlier in November, Musk was unable to meet commerce and industries minister Piyush Goyal in Fremont, California when the minister was on a visit to the US. Echoing Musk’s focus on operational efficiency, Tesla’s chief financial officer Vaibhav Taneja emphasized the company’s focus turning to strategic financial management. Also read: “We are also getting hyper-focused on capex efficiency and utilizing our installed capacity in a more efficient manner,” Taneja said. He pointed out that these cost-saving measures would enhance Tesla’s profitability and enable more substantial investments in AI technology. “Overall we believe that while demand slowdown is a reality, Elon’s tone on the (earnings) call was much more positive than the earlier (December quarter) earnings call,” said Jay Kale, an analyst at equity research firm Elara Capital. Tesla revenue in the latest March quarter fell 9% to $21.3 billion, its steepest year-over-year decline since 2012. However, Musk’s announcement of an expedited timeline for the launch of new “affordable” models sent Tesla’s shares soaring 10% on Nasdaq on Thursday. While Musk has mentioned a possible look at India later in the year, his current focus lies on assuaging investor concerns involving a slowdown in EV sales, even as established carmakers globally prioritize plug-in hybrids. As Tesla continues to weigh its strategic priorities globally, the Indian market for the company remains a story of ‘wait and see’.
Tesla’s India Entry: A Speculative Journey
