Tesla's "love and killing" with India is expected to continue for some time.
On January 13, Tesla CEO Elon Musk said in response to a question on Twitter about when to launch electric vehicles in India that Tesla is still dealing with many challenges posed by local governments in India.
It seems that for the Indian market, even the world's richest man, Musk, will be "frustrated", mainly due to the many differences over the construction of local factories in India and the country's up to 100% import tariffs.
Tesla and India's "Love kills"
Tesla's relationship with India can be traced back to 2017, when Musk publicly "confessed" on Twitter: he hoped to tie the knot with India that summer, but India did not give a warm response at all. Musk then said in a high profile that he hoped to start selling Tesla cars in India as early as 2019, and the Indian government made a request, hoping that Tesla would increase its procurement efforts in India and share a detailed production plan.
Subsequently, Tesla embarked on the road of "communication bride price", for which it has two main difficulties in taking india:
The first is to build factories locally. On October 8 last year, Nitin Gadkari, India's minister of road transport and transport, said that if Tesla wants to have an Indian market, it must build a factory in India to produce and export electric vehicles to other markets. But Tesla says it wants to first try to import cars to India for sale, and then decide whether to build factories there based on demand.
The second is huge tariffs. The Indian market currently has an import tax rate of 60% for cars under $40,000 and 100% for cars over $40,000. Musk has publicly complained on Twitter that Indian tariffs are too high. And with this tariff, even if Tesla successfully enters the Indian market, the profit margin is pitifully small.
In July last year, Tesla sent a letter to India's Ministry of Transport and Industry in an attempt to reduce tariffs on electric vehicle imports from the current 60%-100% to 40%, but without success.
In the years of love and killing, Musk has been trying to act. According to the data, in January 2021, Tesla registered a subsidiary Tesla India Automotive Energy Co., Ltd. in Bangalore, the capital of Karnataka. In December, it was reported that Seven of Tesla's "models" had been approved for sale in India.
However, from the current situation, Tesla's plan to enter India is still in the game.
Why go to India?
Because it is considered by the industry to be the second automobile market to explode after China.
In 2001, Jim O'Neill, chief economist at Goldman Sachs, called India a "BRICS country," and a survey of multinational auto companies and institutions concluded that India would, like China, become the most promising emerging automotive market in the 21st century. In 2008, Carlos Ghosn, then CEO of renault-Nissan Alliance, even optimistically proposed that india would sell 15 million cars a year by 2025.
But in fact, until now, the Indian auto market is still easy to ignore, because most of the cars running on the Indian roads are still affordable models produced by Suzuki and Hyundai's local factories, and are not the mainstream models recognized by the market now.
Of course, these realities do not stop Musk's determination to take India.
Because of India's huge population base. According to the latest report of the United Nations, India's population will continue to grow to 1.6 billion after 2028, and the population will slowly decline until 2100. The report also said that at the end of the 21st century, China may lose the position of the world's most populous country and then lose the position of the second most populous country. In 2100, Africa's total population will also grow to 4.2 billion.
It is worth mentioning that India's population is younger, and the young population means the potential for economic growth on the one hand, and the huge potential car buyer on the other hand. According to expert analysis, India, as the "youngest country in the world", may become the next populous country with rapid economic growth after China.
The second is because of India's government policy. Last September, the Indian government said it would spend Rs 257 billion (about $3.5 billion) to incentivize the auto industry to boost the production of clean cars, a plan that will enable India to leapfrog to cleaner electric vehicles and hydrogen fuel cell vehicles. It will herald a new era of higher technology, more efficient and greener car manufacturing.
"The automobile industry contributes 34% of the GDP of China's manufacturing industry, and it is the 'leader' in the field of job creation in China." When it comes to global auto trade, if we want the Indian auto industry to have a place on the global scale, then we need to increase the participation of the Indian auto industry. Indian Minister Anurag Thakur said at the time.
In this way, if India can complete a comprehensive consumption upgrade, with a huge population base, it is not impossible to become a second China.
How hard is this bone in India: many car companies estimate that they have something to say
To say that the most tragic fall in India is not Tesla, but GM and Ford, which are also American car companies.
As an automaker established for more than a hundred years, GM mainly produces and sells Cadillac, GMC and other series of brand models after entering the Indian market, but in 2017, in order to cut costs, GM announced its withdrawal from producing vehicles for the Indian market, and even sold the Chevrolet brand in India, which is reported to save 100 million US dollars in costs.
Coincidentally, Ford, which has been in India for a decade, also announced in September last year that it would stop producing cars in India and would close its two plants in Sanand, Gujarat, and Chennai, Tamil Nadu, in stages, and about 4,000 employees would be laid off. According to statistics, in the past 10 years, Ford has accumulated losses in India of more than $2 billion, and its market share in Indian new car sales is only 1.4%.
Anurag Mehrottera, head of Ford Motor India, said the Indian branch had failed to find a "sustainable path to long-term profitability," such as localizing car manufacturing. In addition, Fiat and Peugeot have withdrawn from the Indian market, and Renault and Skoda are also considering withdrawing from India.
In addition to these few, many other companies have the same feeling about the topic of "how difficult is the bones of India".
Volkswagen, the world's largest automaker by sales, currently has less than 1% of the car market share in India.
After Audi entered India in 2017, sales figures showed a downward trend for three consecutive years, until 2021, when sales stopped falling and rebounded, an increase of 101% year-on-year, but the number was only 3293. BMW India Group recorded its highest sales growth rate in 2021, with a total of 8,236 vehicles sold.
China's own brands are not to be outdone. At the time of GM's exit from India, it was rumored that Great Wall Motors planned to acquire GM's Tarigan plant in India, but the acquisition has not been completed until now. It was reported that Great Wall Motors had reached an agreement with General Motors on January 10 to acquire the Talegaon plant in India, extending the acquisition period to March this year and up to June this year, because the acquisition project was not approved by local regulators.
Saic Motor can be said to be the most popular independent brand in India, in early 2017, SAIC officially announced an investment of 3.275 billion yuan, through the acquisition and transformation of the HALOL plant located in Baroda, Gujarat, India, to set up a vehicle manufacturing base and supporting supplier park, and launch SAIC's own brand products in India. As of October 27 last year, SAIC Motor India had sold its 10,000th car.
Although from now on, the market share of foreign car companies in India is very low, but this does not hinder their enthusiasm, especially in the field of new energy promoted by the Indian government.
Not only Tesla, German luxury car manufacturer Mercedes-Benz recently announced that it will begin assembling an electric version of its flagship S-Class Sedan EQS in India later this year, mercedes-Benz will also become the world's first luxury car manufacturer to assemble electric vehicles in India, and is expected to start selling EQS in India in the fourth quarter of this year.
I don't know which car company first gnawed down this hard bone of India? Let's wait and see.