Indians Demand Refunds from Tesla as EV Deliveries Falter
In a wave of anticipation back in April 2016, Indian customers, led by tech enthusiasts like Vishal Gondal, founder and CEO of health-tech startup GOQii, leaped at the opportunity to join the electric vehicle (EV) revolution by preordering the much-touted Tesla Model 3. A deposit of $1,000 secured their place in line for a car that has yet to grace Indian roads.
As years rolled by without a Tesla launch in India, the landscape of the Indian EV market began to evolve. Competitors entered the fray, offering their own electric models to a market increasingly eager for sustainable automotive options. This shift happened amid Tesla’s ongoing apprehensions about high import taxes and the complications of establishing a manufacturing presence in India away from its Chinese production bases.
The delay led Gondal and others to look elsewhere for their EV needs, with alternatives from established automakers like Audi finding favor. After a protracted wait of over half a decade, Gondal reclaimed his deposit in early 2023, an experience shared by Hemant Suthar, a Mumbai-based director of a design studio who had harbored his own Tesla ambitions since 2016.
In response to the growing popularity of EVs and to entice manufacturers like Tesla, India made a significant policy shift by slashing import duties on EVs priced under $35,000 to 15%, a steep drop from the previous 70%-100% brackets. This move, however, comes with a catch – the commitment to establish manufacturing within India’s borders within three years.
Despite the potential for lower costs and increased accessibility, Tesla’s Chief Executive, Elon Musk, has expressed concerns since 2019 over the feasibly high prices of Tesla’s offerings in India due to import duties, an issue that has left Tesla’s Indian venture in limbo.
The EV market globally and in India has changed significantly since Tesla’s Model 3 preorder announcement. With Tesla asserting its manufacturing might with new factories across the globe and a production capacity reaching millions, its global sales narrative tells a story of slowed growth amidst an increasingly competitive landscape. Tesla’s innovation and first-mover advantage are now challenged by the likes of BYD, which is making significant inroads into markets previously eyed by Tesla.
Tesla’s potential entry into the Indian market now faces stiff competition not only from international players like BYD but also from domestic giants like Tata Motors, who currently dominate India’s burgeoning EV market. India’s complex automotive sector, characterized by price sensitivity and a preference for vehicles with comprehensive after-sales service networks, may prove a formidable challenge for Tesla’s direct-sales model and luxury pricing.
To captivate the Indian consumer’s interest, experts suggest that Tesla would need to hit a pricing “sweet spot” and offer a vehicle tailored to the mass market, necessitating local manufacturing to circumvent heavy import duties and price barriers.
As Tesla deliberates over its Indian market strategy, the future of electric mobility in India continues to unfold, shaped by policy, market dynamics, and the evolving preferences of Indian consumers. With or without Tesla, India’s journey towards electric vehicles is gaining momentum, driven by an appetite for clean, efficient, and sustainable transportation options.
Rajesh Kumar Singh, a key figure in India’s industrial promotion agency, recently highlighted the uncertainty surrounding Tesla’s plans for India, reflecting the broader ambiguity that marks Tesla’s current standing in the rapidly evolving Indian EV market.
