Tesla’s India Entry: A Limited Threat to Local EV Players
Capital markets and investment group CLSA suggests that Tesla’s entry into the Indian electric vehicle (EV) market may not pose a significant threat to established Indian automakers. Even if Tesla launches a $25,000 BEV, CLSA believes this price point would necessitate “compromised” features compared to its standard models.
A Tesla vehicle.
Currently, Tesla’s most affordable models, the Model 3 and Model Y, are priced around $35,000 in the US. To compete in India, Tesla would either need to sell these models at a loss or reduce features. CLSA’s analysis indicates that even with a reduced import duty of 15-20%, the price would still be significantly higher than comparable electric SUVs from domestic manufacturers such as Tata Motors (TaMo), Mahindra & Mahindra (M&M), Maruti Suzuki India (MSIL), and Hyundai Motor India (HMIL).
CLSA points out that Indian OEMs are offering attractive features at competitive prices. This situation, they suggest, mirrors the acceptance of Harley Davidson X440 bikes in India. These bikes are priced 20% higher than Royal Enfield Classic 350s, yet the latter still far outsells the Harley.
Interestingly, despite the buzz around Tesla, the stock prices of several Indian auto OEMs with EV plans have fallen over the past two weeks. M&M fell by 16.5%, TaMo by 4.8%, MSIL by 5.57%, and HMIL by 5.4%. CLSA believes the market already factored in a de-rating of M&M. They do not anticipate a major impact on TaMo, MSIL, and HMIL from Tesla’s entry.
Currently, import duty on cars priced above $40,000 in India is 110%, including the agricultural cess. While this is subject to change, CLSA argues that even if Tesla positioned its Model 3 at an on-road price that’s 20–50% higher than competitors like the e-Vitara, e-Creta, or XEV 9e, Tesla would not significantly impact domestic EV models.
India’s EV market penetration is quite low at 2.4%, compared to 12% globally and 30% in China. However, CLSA believes that BEV penetration in India could achieve 15% by FY28 and 25% by FY30. Even if Tesla secures a 10-20% market share in EVs by FY30, they project that this translates to only a 2-5% overall passenger vehicle market share.
