PM Narendra Modi and Elon Musk to Announce Historic EV Deal
The world’s two renowned and powerful figures PM Narendra Modi and Elon Musk will meet in India on April 22. Their camaraderie began back in 2015, and Musk, a self-proclaimed big fan of Modi, has ambitious plans to bring Tesla to India.
Speculations are running high on the EV deal, with analysts assessing its potential impact on the Indian economy and identifying the potential beneficiaries. Everyone is eagerly awaiting the announcement from Musk and Modi to see what they will unveil.
Anticipation Builds: What to Expect from Modi-Musk Epic Meet
PM Narendra Modi met Elon Musk during a political visit to the US in June 2023. That time Musk said,
“I am confident that Tesla will be in India… as soon as humanly possible.”
Moving on, in April 2024, there are strong indications that Tesla will finally enter the Indian automotive market. Musk, himself has confirmed his India visit and excitement to meet the PM of India via X.
As per news, Tesla, the EV giant will be making its debut in the country. The highly awaited meeting may reveal a groundbreaking partnership poised to revolutionize India’s transportation sector.
The Tesla-Indian government deal holds immense promise for both parties. It signifies a significant step for India in achieving its ambitious goals of electrifying its vehicle fleet and combating air pollution. Tesla’s entry into the Indian market is expected to spur the adoption of EVs and stimulate investment in the renewable energy landscape.
India presents Tesla with a vast market full of potential. With a population exceeding 1.3 billion, it offers a lucrative opportunity for Tesla to expand its global presence and boost sales of its EVs.
Moreover, India’s ambitious renewable energy goals and favorable government policies create an environment conducive to Tesla’s success.
To summarize:
Tesla’s entry will directly and indirectly enhance the country’s economy.
Boost new job opportunities from the establishment of long-term operation of factories.
Improved localization of Tesla vehicles will cut prices, rendering EVs more affordable for Indian consumers.
However, PM Narendra Modi has made his vision clear by noting,
“Whoever wishes to invest can do so, but it must be built by Indians so that the youth of my country gets employment.”
Projected Growth Report of India’s EVs through 2022-2030
source: statista
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Musk expressed his desire to introduce Tesla vehicles in India long back. However, he also pointed out that ‘India has the highest import duties in the world by far of any large country’.
Here’s a peek into the regulatory framework for EV manufacturers in India
Investment and Manufacturing Requirements for Global Companies
The recently introduced EV policy by the Indian government aligns with the company’s goals but it comes with specific requirements that must be fulfilled. They are:
Global companies entering India’s EV market must invest a minimum of Rs 4,150 crore to establish electric vehicle manufacturing plants.
There’s no cap on investment, but companies have a 3-year window to start manufacturing electric cars locally.
Within five years, they must incorporate at least 50% locally-produced parts, with 25% to be made in India by the third year.
The government will permit the import of completely built electric cars (CBU) valued at a minimum of $35,000 (Rs. 29.2 lakh), including cost, insurance, and freight.
Currently, Tata Motors dominates the local EV market, with MG Motor India and Mahindra & Mahindra closely behind.
Tesla’s Unique Situation for the Indian Market
Tesla can import a limited number of electric cars to India at a reduced tax rate of 15% if they invest at least USD 500 million and establish manufacturing plants within three years; otherwise, the tax rate is 70%.
In 2021, Tesla approached the Indian government, requesting duty cuts for importing its vehicles. Elon Musk stated in 2022 that Tesla wouldn’t start manufacturing in India unless allowed to sell and service its cars there. He had previously hinted at the possibility of setting up a manufacturing unit in India, depending on the performance of its imported vehicles.
Tesla’s Advantage: Thriving in India’s Booming EV Landscape
India’s rapidly growing EV market presents Tesla with an opportunity to expand its global market presence and enhance its brand value.
A market research report by INSIDEEVs stated that in 2023:
Tesla produced over 1.84 million electric vehicles globally and delivered over 1.8 million electric vehicles to customers.
It means production spiked by 35%, while deliveries by 38% in just one year.
Furthermore, in Q4, Tesla produced a global total of 494,989 electric cars, marking a 13% increase compared to the previous year.
The recent results reveal a slower year-over-year growth rate and highlight serious competition from Chinese EV giant BYD. Despite Tesla’s impressive Q4 results, BYD outpaced them in delivering more low-cost BEVs, (priced at $10,000). This is an indication of intense competition in 2024 and beyond.
Some media reports suggest that this year, Tesla’s stock has plummeted by more than 30%. It took a sharp dip earlier this week after the company abandoned its plans for a low-cost EV. But Musk denied this. To bolster the declining stock, he had to market Tesla’s robotaxi.
Therefore,
Musk’s plan to get Tesla to India may be a ray of hope for the company’s dwindling sales and stock value.
Anticipation is high for introducing Tesla’s renowned electric cars like the Model S, Model 3, and Model X on Indian roads.
Projected total deliveries of Tesla Model S/X/3/Y, Cybertruck quarterly report from 2015-2023
source: insideevs
Furthermore, Santosh Iyer, MD & CEO of Mercedes in India, discussed the influx of global EVs to the country with the leading newspaper, The Times of India (TOI). He noted,
“Our EV charging bays will be open for Tesla cars, just like they are for an EV of any other brand.”
In India, Mercedes Benz has a network of 116 charging stations across 36 locations and sells EVs through dealerships.
Additionally, expectations are soaring for Tesla’s cutting-edge Lithium battery technology and autonomous driving capabilities to redefine India’s automotive industry.
Based on this speculation, it’s evident that a partnership between PM Narendra Modi and Elon Musk could significantly boost net-zero goals. Tesla’s technological expertise combined with India’s expansive market potential can expedite the transition to a cleaner, greener future.
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