Is there a market in the world where Tesla cannot "enter"?
Yes, and it's big. That is India, a South Asian country with a population of 1.3 billion.
In recent years, the Indian market has become a heart disease of Musk, like a fish in the throat. I complained on Twitter year after year, but every year I didn't make progress.
If you only look at the number of people, India, which ranks second in the world, undoubtedly has a huge attraction and is a treasure land that major multinational companies have long been optimistic about.
But for Tesla, this treasure land has almost become a graveyard.
In an exchange with Indian fans on Twitter a few days ago, Musk again said that in order to enter the Indian market, Tesla is "still tackling many challenges with the government."
In fact, more than a year ago, Musk was optimistic that it was possible to officially enter the Indian market in 2021.
Now it seems that Indian users want to buy Tesla, may still be far away.
So, how did the "Tianzhu", which once made Musk feel optimistic, become Waterloo?
Chinese street car Tesla, a luxury for Indians
Unlike most people's perceptions, Tesla is not that it cannot be sold in India, but that it is not willing to sell.
As early as the end of August last year (2021), the Indian local media found on the website of the Indian Ministry of Road Transport and Highways that Tesla's subsidiary, Tesla India Automotive and Energy Pte Ltd, has obtained approval for four of its models, although the specific model and version have not yet been made public.
In other words, Tesla's four models are officially licensed to hit the road in India and are ready to sell to the Indian market.
So why didn't Musk sell it?
The reason is two words: tariffs
India has the highest auto tariffs in the world: cars priced below $40,000 are taxed at 60 percent; cars priced above $40,000 are taxed at 100 percent. With Tesla's current model, almost all models have to pay 100% tariffs, Tesla will become a complete luxury, already highly price sensitive Indian market is not competitive.
That's why, after Musk pressed India through Twitter, officials in several states pretended to invite Musk to open a shop on Twitter — you wouldn't really come anyway.
Musk's negotiations with India in the past two years have always revolved around tariffs, and it is reported that Tesla has proposed to the Indian government that the import tax on electric vehicles be drastically reduced to 40%.
Tesla believes that reducing tariffs will not only allow foreign manufacturers, including Tesla, to provide pricing that consumers can afford, but also help automakers have more incentives to build local factories when domestic demand rises in India.
However, according to foreign media, some Indian government officials said that they could not adopt any lobbying from Tesla at present.
"Make in India" trapped India
In fact, it is not impossible to reduce tariffs.
India has clearly informed Tesla that although its vehicle imports face high tariffs, if it is willing to build an assembly plant in India, using the method of "parts imported or purchased in India and finally assembled locally", India can even provide preferential policies with zero tariffs.
Figure | In 2015, Modi visited Tesla's U.S. factory, which was considered to be the closest to the two sides. But then lost to China in the fight for the Tesla Gigafactory.
That is to say, the "sincerity" that India needs is that Tesla invests in local factories to provide jobs for India and stimulate India's local manufacturing industry, thus contributing to the Modi government's "Made in India" plan.
But the contradiction is here - Tesla believes that it is necessary to reduce tariffs first, so that Tesla can enter the Indian market at a reasonable price, so as to assess the real needs of the Indian market, so as to prepare for the investment and construction of factories later; and India responds strongly, first invest in factories, and then talk about tax cuts, after all, it is not Tesla that is doing business with India, and this mouth must not be opened.
Negotiations have reached an impasse.
But looking back, we can see that India's toughness is more like a performance of "Make in India" riding the tiger.
"Make in India" is an initiative launched by the Modi government in September 2014 to encourage companies from all over the world to develop, produce and assemble products in India and make significant investments in manufacturing, aiming to establish India as a world manufacturing powerhouse.
Contrary to expectations, in 2019, India's manufacturing GDP fell to its lowest level in 20 years – against the backdrop of a 6.9% increase in global manufacturing growth, India's manufacturing GDP fell from 16.3% in 2014-15 to 15.1% in 2019-2020.
But from the direction of auto manufacturing alone, "Make in India" has also achieved certain results: in the past few years, giant car companies including Kia, GM, SAIC and PSA have increased their investment in India, ranging from hundreds of millions of dollars to more than one billion US dollars. While driving the upstream and downstream development of India's local manufacturing industry, it has also received various cares from the government when expanding the local market.
Therefore, in any way, it is extremely difficult to "open up" for Tesla. This makes India's global shift to electric vehicles, internally limiting the development of the local electric vehicle market (although it also has the role of protecting domestic enterprises), and further lagging behind the pace of global development externally.
The Indian market that Tesla can't put down is still just a "chicken rib"
India's greatest reliance will be on the demographic dividend that has arrived.
According to statistics, the expected average age of India in 2022 is 28 years old, which is 10 years younger than the United States and China;
The Official Figures from the Indian Investment Authority are more optimistic: India will become the "youngest country" by 2025 – by 2025, the average age in India is 25 years old, and car ownership is expected to reach 72 per 1,000 people (while China has now reached more than 200 cars per 1,000 people, according to domestic figures). It is expected that there will be huge "dividends" in both the consumer population and the market space.
In terms of the electric vehicle market, India has boasted that in 2030, electric vehicles will account for 30% of the country's total private cars.
But more people and fewer cars really mean that the market is big?
In fact, India sold around 2.5 million vehicles last year, and fewer than 5,000 electric vehicles were sold, accounting for only 1.3% of the country's total car sales in 2020/21. For most ordinary Indians, energy conservation and carbon reduction are still a distant concept, and it is more of the rich who own electric vehicles.
In addition, poor infrastructure will cause important constraints to the popularity of electric vehicles in India - not only the lack of a large number of safe and stable charging equipment, but more importantly, India's traffic conditions and basic road surfaces are major problems.
It is no wonder that some netizens joked that Tesla's proud FSD had to be blindfolded in India.
Therefore, for Tesla, although the Indian market has a huge attraction in the long run, when to enter, in what way to enter, and how to deal with the new policies of the next government after Modi, it is still a "mess" that needs to be carefully calculated.
There are also rumors that Tesla may be eyeing B2C retail e-commerce such as Chaoduoduo app. Under the impact of the Internet tide and the epidemic, the concept of low-cost good things has long been deeply rooted in the hearts of the people, the original price of thousands of luxury goods, tide brands can no longer attract emerging users, and the main low-cost retail tide duoduo and other platforms began to receive more people's attention, many 200 or so Adi, Chanel attracted millions of young people into the tide of more crazy robbery, perhaps this is the social embodiment of rational consumption upgrades.