Tesla's India Entry: Challenging the Market with Price Strategies

A report by CLSA suggests Tesla's entry into India may struggle due to higher pricing compared to domestic EV models. Despite reducing import duties, Tesla's cheapest car will cost Rs 35-40 lakh. Local manufacturing could make Tesla's cars more affordable, addressing India's price-sensitive market.

As Tesla prepares its long-anticipated entry into India, the electric vehicle giant faces pricing challenges, with its cheapest model still costing Rs 35-40 lakh, according to a report by CLSA. This comes despite import duties potentially being reduced to below 20 per cent.

The report highlights that even with duties cut and additional charges added, Tesla's Model 3—currently priced at USD 35,000 (approximately Rs 30.4 lakh) in the U.S.—would cost around USD 40,000 or Rs 35-40 lakh in India. Competing with domestic EV models like Mahindra XEV 9e and Hyundai e-Creta, Tesla may not significantly disrupt the Indian market.

Furthermore, establishing a manufacturing presence in India could make Tesla's vehicles more competitively priced, capturing more of the price-sensitive market. Without local production, even reduced duties might not suffice to lower Tesla's prices to align with Indian consumer expectations. Tesla also began recruitment in Mumbai, underscoring its commitment to market entry.

(With inputs from agencies.)