Hey everybody, welcome back to the Elon Musk Podcast.
This is a show where we discuss the critical crossroads that
shape SpaceX, Tesla X, The Boring Company, and Neurolink.
I'm your host, Will Walden. Tesla has officially launched
its Model Y in India, setting a starting price of about ₹5.5
million. That's about $66,000 USD and
raises this really interesting question though.
Who in India is going to buy a Tesla for that price now?
The company opened pre-orders for the vehicle this week
following the Prime Minister Modi's March approval of a
policy that reduces import taxes on EVs for global automakers
willing to invest at least $500 million in local manufacturing
and start building cars in India within three years.
Now, Tesla is the first major company to take advantage of the
new policy and has moved quickly by announcing a launch for its
most popular global model. However, India it might not be
rated for this. The prices could create a major
barrier for people. Now the cost places the Model Y
in the same segment as high end luxury brands like
Mercedes-Benz, Audi, BMW without matching the badge value or
luxury appeal those brands carry.
In India's premium car market. It's different.
In India, Mercedes-Benz, Audi and BMW really big deal.
Tesla. Not as much right now.
Not as rushed, not as not as much.
But Tesla plans to sell the India bound Model Y through
direct imports for now, with units shipped from its factory
in Berlin. That keeps the price far above
what Indian consumers typically spend on a car.
Now the average vehicle in India sells for about $13,000, even
among EVs where pricing is usually higher.
Tesla's $66,000 entry point is more than triple the cost of the
top selling EV in the country. The Tata Nexon EV priced around
$20,000. Even MG and BYD, both foreign
brands, offer electric SUVs for $30,000 or under.
How is Tesla going to compete with that?
This twice plus the cost of another EVABYD.
Mind you, BYD competes directly with Tesla with technology and
MG same thing, very similar. Now.
Despite these prices though Tesla's interest in India, it's
been long-awaited towards the company establishing a physical
presence in the world's third largest car market.
That's the had previously spent years installed negotiations
over import taxes and infrastructure policy before
reaching an agreement with Modi in earlier of 2024.
As part of the deal, Tesla will build a manufacturing plant in
India and construction is expected to begin in around
2026. And until then, Tesla will rely
on its Berlin factory to supply the Indian market with a limited
number of vehicles, using the interim period to test demand
and brand acceptance. Now, Tesla's Model Y pricing
strategy in India mirrors its approach in smaller luxury
oriented markets where sales volumes are low but brand
visibility is very important. However, the Indian car market
is extremely price sensitive even in the luxury segment.
With Mercedes and BMW, they sell small numbers of high end
vehicles annually. Tesla is a relatively unknown
quantity in India outside of tech savvy consumers and EV
enthusiasts. They kind of have to start all
over when they go over to India. Company will have to convince
those buyers to pay more for a brand that doesn't yet have
widespread service centers. There's barely any charging
infrastructure or customer support operations in that
country, and the company has not disclosed expected sales volumes
for India. But sources say the Tesla's
planning for expectations are very conservatives, with fewer
than 1000 units to be targeted for India in the first year.
Now, Tesla's priority in this phase is to gauge consumer
response to the vehicle and test its logistics and service
capabilities. Companies also recruiting for
sales, service and charging teams across by Delhi and the
whole nation. So several Indian automakers
have also criticized the government's decision to give
tax breaks to Tesla, an outside company, from an outside foreign
soil. Executives at Tata Motors and
Mahindra have publicly said that any policy favoring imports
undermines local EV innovation. However, the government sees
Tesla's presence as a way to bring global attention and
technology transfer to India's EV ecosystem.
Officials involved in the policy decision said the long term goal
is to attract not only Tesla and Elon Musk but other
international EV players like Rivian, Polestar and Lucid to
establish factories and also R&D centers in India.
It's going to be a win for India if all of these companies get in
there. There's going to be a major tax
breaks for these companies, but also eventually the state and
Government of India will be making money from these.
Sales to Tesla's first batch of Model Y units for India will
include both rear wheel drive and dual motor all-wheel drive
variance. And get this, the top end
version is $78,000 USD. Now that's the price which
includes the reduced import duty offered under the new policy,
which Tesla received by committing to invest at least
$500 million in to begin production within three years.
Even with the reduced tariff though dropping from over 100%
to 15%, the price remains far above what most Indian consumers
can afford or justify justify to pay.
The car will initially be sold only online, with deliveries
expected to begin in earlier 2026.
Tesla's following its global strategy of direct to consumer
sales without third party dealerships.
This model has proven difficult in India in the past, where
consumers are more accustomed to interacting with dealership
networks and value on site after sales service.
Tesla's digital first approach may further limit its appeal
unless it can build a service infrastructure quickly enough to
reassure buyers that if something happens to their
vehicle, Tesla will be there for them.
Now they don't really have much of A charging infrastructure for
Tesla vehicles over there. It's a major bottleneck for
them. But Tesla has announced plans to
deploy its Supercharger network across 3 metro areas initially,
but expansion will depend on partnership with energy firms in
India and also the Public Utilities there.
Most Indian cities still lack widespread EV charging stations
and long distance travel remains impractical for EVs without
dependable public or semi public charging grid.
Thus is in early stage discussions with Reliance and
Tata Power to Co develop high speed chargers along highways.
But there's no agreements that have been finalized as of yet.
Now Indian financial institutions are also unsure how
to structure loans or leases for a product has no historical
resale value in the country. Now, used Teslas currently don't
exist in India and banks will need time to develop valuation
models. This adds another layer of
friction to purchases like what do you do with your Tesla after
five years? What's the price?
What are you going to get for it?
How can you trade it in? There's no structure for that
yet. It's brand new over there.
You know there's friction for those purchases since even
wealthy buyers often rely on financing for high value car
purchases to take advantage of tax benefits or investment
flexibility. Now Tesla.
The launch in India comes at a time when the government is
pushing hard to electrify transportation and also reduce
oil imports. India imports over 85% of its
crude oil and electric mobility is a central part of its energy
policy. However, electrification in
India has centered on two and three Wheelers which make up
about 80% of vehicle sales. Government has supported public
bus electrification and last mile delivery EVs but private
car electrification is still Mason with under 3% of new car
sales being electric now. This is India's strategy begins
with a branding play rather than a volume play.
They're going to have about 1000 models go out.
Company is not entering with an expectation to compete on price
or dominating sales. Instead, we use this launch to
establish a foothold, sneak in, build operational muscle and
prepare for a more competitive phase once local production
starts. And also when you get an
infrastructure and they have charging stations and they have
service stations and they have the people on the ground to help
out. Now, the real test though, of
Tesla's India ambitions will come after its factory begins
production in 2027, allowing the company to sell cars without
import duties. And it prices closer to Indian
EVs, but nowhere near the normal cost of a car there, which is
under $20,000, and other EVs, which are usually around $30,000
USD. It's official though, Tesla is
heading to India. Hey, thank you so much for
listening today. I really do appreciate your
support. If you could take a second and
hit the subscribe or the follow button on whatever podcast
platform that you're listening on right now, I greatly
appreciate it. It helps out the show
tremendously and you'll never miss an episode.
And each episode is about 10 minutes or less to get you
caught up quickly. And please, if you want to
support the show even more, go to patreon.com/stagezero and
please take care of yourselves and each other and I'll see you
tomorrow.