As Tesla Mulls India Entry, The Country Gets ‘Electrified’

Tesla To Launch Its Electric Car in India


In a response to a tweet by an Indian car enthusiast, Tesla CEO Elon Musk confirmed that Tesla was indeed planning a summer 2017 launch in India. That’s great news as the company has managed to generate massive global interest in its electric car and battery technology. Car enthusiasts can’t wait to get their hands on a Tesla car.

But going beyond the excitement, is a question we need to ask ourselves: Is the country ready to absorb electric car technology?

Challenges remain at the government policy level, at the infrastructure level and finally at the cost and support level. Internationally, Tesla has launched Model S – a premium sedan, and Model X – an SUV, but it is the latest Model 3 – positioned as an affordable sedan, which is expected to make its debut in India this summer.

Where is the infrastructure?

Buying a Tesla in India today would be great, but how does one go about conveniently charging the car? The key issue here is access and convenience, besides the cost.

Indian automobile companies are yet to take up the electric challenge. Only Mahindra has made a small beginning by launching the e2o electric car but got a lukewarm response from car buyers across age, gender and location. One of the major hurdles faced by the company is lack of recharging infrastructure in cities and towns. Highways have no facilities at all. This requires the government to revisit its policy for promoting green energy for transport.

If personal and public transportation has to go electric, it will entail the government to come out with policies and incentives that encourage public-private partnership in establishing supercharging points at convenient locations in cities, state and national highways. Tax benefits will need to be offered to car makers to manufacture more electric cars and public transport vehicles.

The dilemma before car manufacturers

From a car maker’s perspective, the infrastructure will first have to be established before they begin making heavy investments in the electric car segment. And unless they make large investments in R&D and subsequently in production, the cost of an electric car is unlikely to come down.

The problem for the government is that it can ill-afford to invest in infrastructure when there is limited demand. Another major issue is that the present power generating capacity is not able to meet the existing demand; therefore, to have another industry open up to create further demand, is a dilemma before the government. This is a Catch-22 situation that’s holding back the electric car industry from becoming mainstream.

So when Tesla launches Model 3 in India this summer, it will have to address the lack of supercharging stations in India if it wants to be a serious player. Tesla will, otherwise, remain a hobby car for the few who can afford it.

In the US, the company has made the right moves with significant investments in establishing a network to support their cars. Prime Minister Narendra Modi personally visited Tesla’s Gigafactory in the US to see for himself the technology. Subsequently, Minister for Roads and Highways Nitin Gadkari, too, visited the Tesla plant.

An invitation has been extended to Elon Musk to set up a factory for Tesla in India to serve as a regional hub, a proposal that remains open. If Tesla wants to establish itself, it will have to engage closely with the government to set up the necessary infrastructure that will benefit not just Tesla but all electric car manufacturers.

Car financing is another issue. In the US, Model 3 costs US$35,000,  or Rs 24 lakh approximately. In India, the car is expected to cost higher unless the government offers major tax breaks. Tesla offers some very innovative finance options to potential buyers in the US. It remains to be seen if they replicate some of those in India and whether Indian policies will allow for those terms.

Gigafactory – world’s biggest

Tesla has taken the first-mover advantage by establishing itself as a long-term player in the electric personal transportation space and in the micro renewable energy storage space. The company has made massive investments in establishing the Gigafactory in Buffalo, NY, in close cooperation with Panasonic and other companies.

The plant, when fully functional, is expected to produce 35 GW/h per year of lithium-ion battery cells. That would be close to what the entire world produces today.

An integrated approach to revolutionising personal transportation

Elon Musk realised long ago that his dream to manufacture and sell electric cars will depend upon the infrastructure to sustain such cars. So, he decided not to wait for government assistance but instead invested in R&D to develop and operate a nationwide network of supercharging stations.

These supercharging stations are the most efficient charging points ever developed and the process of installing them along highways and other convenient locations in the cities is currently under way.

To incentivise fossil fuel car owners to switch over to Tesla’s electric cars, the company is offering 400 kW/h of supercharging credits on the anniversary of the car delivery. This translates to around 1,000 free miles or 1,609 km.

Affordability is the key to Tesla’s success and therefore the company is offering supercharging at extremely low rates. A trip in a Tesla car from Los Angeles to New York covering 4,466 km costs around US$120 or Rs 8,160 only! At these prices, all Tesla has to do is further improve recharging access points and bring down the capital cost of the cars to emerge a strong market leader.

Catalyst to sustainable energy initiative

In addition to electric cars, Tesla is also fast emerging as a major player in the home renewable energy and battery storage space. The company has developed the Tesla Powerwall and Powerpack for home use, that can store solar energy in efficient battery packs for meeting the complete energy needs in a home. This will enable home owners to go completely off the electric grid. India is keen on this technology.

Beyond just cars

Tesla can be a game changer and a catalyst to an industry that is clearly the future. The government must extend full support and cooperation to Tesla which can share its innovative technology to usher a revolution in the personal and mass transportation industry, as also in developing the micro renewable energy business in India.

Till then, let’s look forward to Model 3 hitting the Indian roads.