Will Elon Musk’s Tesla Help Drive India’s Green Mobility Revolution?

The auto industry in India began leapfrogging to electric vehicles for the country’s green revolution.

The Indian government is actively looking to make electric vehicles a reality in the country. According to a proposal drafted by NITI Aayog, the country could slash its oil import bills by as much as US$40 billion by 2030 if electric vehicles are widely adopted. The agency further recommended incentives of US$4.6 billion by 2030 for companies manufacturing advanced batteries. Since India is ambitious towards expediting the adoption of EVs, Tesla has now entered the country’s EV revolution. Recently, the electric car maker set up its R&D center in Bengaluru, India.

Elon Musk’s Tesla spent over US$1 billion in the past quarter including new factories in Austin, Texas, and Brandenburg, Germany. As the company has long been interested to expand its business in India, according to Road Transport & Highways minister Nitin Gadkari, it will begin operations with sales in early 2021 and then may look at assembling and manufacturing vehicles in the country.

According to reports, sales teams at Tesla are currently working on developing custom sales and production orders for the Indian market to ensure orders are complete and validated once the configuration is finished.

State of Electric Vehicles in India

Electric vehicles are a better alternative to fuel-driven vehicles that are actively causing the environment. E-vehicles in this scenario could mitigate air pollution, helping in driving green mobility. By 2030, the Indian government aims to make the country a 100-percent electric-vehicle nation, with plans to make all three-wheelers run on batteries by 2023 and all two-wheelers by 2025. According to a report from Manufacturers of Electric Vehicles (SMEV), electric vehicle sales, excluding e-rickshaws, in India grew by 20 percent at 1.56 lakh units in 2019-20, up from total EV sales of 1.3 lakh units in 2018-19.

Many states in India have made their EV policies to support the national electric mobility policies. Karnataka, Andhra Pradesh, Maharashtra, Kerala, Madhya Pradesh, Tamil Nadu, Telangana, Uttarakhand and Uttar Pradesh have already their policies approved. On the other side, Bihar, Gujarat, Himachal Pradesh and Punjab have their policies drafted. Almost every state EV policy prioritizes two- and three-wheelers, public transportation, and job creation.

Apart from this, billions of dollars have proposed to incentivize electric vehicles in India. In 2019, the government launched the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME-II) program to expand shared mobility, electric mobility and EV in the country. The program intensifies the financial investment for EVs and mobility to INR 10,000 crore (US$1.4 billion), over a 10-fold increase from INR 895 crores (US$129 million) under the past FAME I scheme.

Could Tesla Entry in India Revolutionize the EV Ecosystem?

Electric mobility is already a work in progress in India. Now the arrival of Tesla in the Indian market has raised much hype in the country’s automobile industry. Reports indicate that the company is expected to launch the first Tesla Model-3 sedan in 2021, 14 years after its launch in the US. This will be sold in India through the CBU (Completely Built Unit) route, at a price starting at approximately INR 60 lakhs. 

The entry of Tesla in India will significantly fuel the race in the country’s electric cars space. However, the company will face growing competition from Indian car makers including Mahindra and Mahindra, Tata Motors and Maruti. For example, Mahindra plans to launch Mahindra XUV300 Electric, an all-electric car, in 2021. Moreover, industry experts are also eyeing Budget 2021 concerning electric vehicle policies in India.