Tesla India journey moves in slow lane
“Their strategy is different from Tesla, which first wants to take the import route and test the market. Like Tesla, Vinfast is also going through its share of global challenges, but the difference in approach is evident,” the executive said.
Tesla didn’t reply to Mint’s queries emailed on Wednesday.
While representatives from Tesla have visited sites in multiple locations in India, with states such as 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 fuelled uncertainty about the company’s India plans.
Coincidentally, Tesla’s vicepresident of public policy and business development, Rohan Patel, who was leading the company’s negotiations with the Indian government, resigned shortly after Musk cancelled his India visit. 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, the people cited above said. Tesla didn’t respond to Mint’s queries on Patel’s resignation.
People familiar with the company’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 plan to optimise its current capacity and production lines doesn’t leave it much room to make a new investment in India just yet, these people added.
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.
The vehicles imported under the scheme must be priced above $35,000. To be sure, even conventional cars in this price range form a fraction of the Indian market. According to Jato Dynamics, there are 25 EVs above this price in India currently, and their sales surged from 1,110 units in 2022 to 6,733 units in 2023.
Meanwhile, Tesla’s chief financial officer Vaibhav Taneja emphasized the company’s focus turning to strategic financial management, in a call addressing Tesla’s investors on 23 April. “We are also getting hyper-focused on capex efficiency and utilising 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.
“While demand slowdown is a reality, Elon’s tone on the (earnings) call was much more positive than the earlier 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-onyear decline since 2012.