Tesla seems to be moving closer to penetrating the electric vehicle industry in India since the government agreed to lower import taxes under a new policy.
Instead of being intimidated, rival MG Motor India is optimistic about Tesla’s imminent arrival in the local market.
“Tesla is really welcome. It’ll be good for the industry, good news for the country, and for serious players like us.”
MG Motor India CEO Emeritus Rajeev Chaba
MG Motor India expects healthy competition with Tesla’s market entry
MG Motor India Chief Executive Emeritus Rajeev Chaba asserted that the Indian electric vehicle industry still lacks competition, impeding it from achieving significant growth.
Thus, CEO Chaba said in an interview with CNBC’s Sri Jegarajah in Gurugram that he believes the participation of global players like Tesla will introduce healthy competition in the local market.
“Competition is limited at this point of time. Numbers are still constrained because consumers don’t have compelling choices.”
MG Motor India CEO Emeritus Rajeev Chaba
Electric vehicles only account for approximately 5% of the overall auto industry in India, as per Bain & Company.
However, CEO Chaba contends that the country’s 30% EV sales target by 2030 “looks stretched at this point of time” due to a lack of policies that can attract global players.
Need for more supportive policies
The MG Motor India boss pointed out the need for more government policies to support the shift to electric vehicles.
CEO Chaba claims supportive policies can attract more foreign companies to compete and invest in the Indian market.
“When India as a market gets attention, more and more players and investments will come in. [Tesla] will definitely help in developing the ecosystem and some consumers will go for them.”
MG Motor India CEO Emeritus Rajeev Chaba
In a significant advancement, India announced a new electric vehicle policy that cuts import tariffs on eligible models to 15% for companies adhering to the requirements. It indicates a notable drop from the original 70% to 100% import tariffs for foreign automakers.
Electric automakers who committed to investing at least $500 million and establishing local factories within three years will be able to import up to 8,000 EVs costing $35,000 or more annually at a reduced tax rate.
This new policy is indeed good news for the Musk-led company, considering how the high import taxes have impeded Tesla from launching its offerings in the country.
Tesla’s priority
Tesla Chief Elon Musk has long been eyeing the Indian market, even saying it has “more promise than any large country in the world.”
However, it seems that investments in the Indian industry may not be at the top of Tesla’s priority list right now. In fact, CEO Musk recently delayed his set visit to India this week due to “heavy Tesla obligations.”
CEO Musk is expected to meet Prime Minister Narendra Modi and announce a $2 billion-$3 billion investment in a local factory.
Tesla CEO’s decision to delay his Indian trip is unsurprising, considering that the company hit a 9% loss in Q1 2024 revenue. It marked the largest drop in revenue since 2012. CEO Musk may be focusing on new strategies to alleviate investors’ apprehensions.
