NEW DELHI: Elon Musk, founder of Tesla, on Monday unwittingly agonised many prospective Indian buyers of Model 3 when he indicated his firm may have to put on hold its launch plans in the Indian market due to the absence of an ecosystem for the supply of electric vehicle components.
Responding to a query from Twitter user Avinash Singh on Tesla’s Indian plans, Musk indicated that the supply ecosystem is very important for Tesla. “Maybe I’m misinformed, but I was told that 30 per cent of parts must be locally sourced and the supply does not yet exist in India to support that,” he tweeted.
This contrasts sharply with his statement last month that Tesla is likely to introduce its products in India sometime in the summer of 2017. But there is still some reason to hope for Indian buyers.
Industry executives and government officials expressed surprise at Musk’s reference to conditions for local sourcing.
Sugato Sen, deputy director general, Society of Indian Automobile Manufacturers categorically said mandatory local sourcing requirements do not exist for auto firms.
He added that vehicle makers can import cars valued at less than $40,000 by paying an import duty of 60 per cent. For cars valued over $40,000, the duty stands at 100 per cent. “Semiknocked down units and completely-knocked down units attract import duty of 30 per cent and 10 per cent respectively,” Sen added.
Minister for road transport and highways Nitin Gadkari had offered Tesla land near ports so that the company can set up a manufacturing unit in the country and make it an export base. Tesla is yet to commit to the proposal.
A government official told ET on Monday that the offer to Tesla was unconditional and there was no stipulation on local sourcing.
“We’ve offered them all help to support manufacturing here. The minister wants India to be Tesla’s Asia manufacturing hub and the company was conveyed that during his visit to Tesla factory last year. We’ll facilitate whatever help they need,” a senior roads ministry official said.
The official added that Tesla will get all incentives if it wants to manufacture batteries or cars here.
“Right now there’s no such proposal from Tesla though we’ve invited them.
“In case there’s a formal proposal, the company will get all incentives that are available for automobile sector under Make in India. Incase they seek anything specific we’ll try to facilitate it if permissible under the existing manufacturing policy,” said a senior roads ministry official.
Tesla’s eagerly awaited Model 3 will sell at $35,000 in the United States. Model 3, the car, the third model after Model S and Model X had several Indian car enthusiasts make an advance booking of $1,000.
One of the imponderables in the opportunity that India offers is the ecosystem to enable electric cars to ply on Indian roads, especially charging stations. India has declared that by 2030, carmakers can only sell electric vehicles which the International Energy Agency or IEA termed as “ambitious” in view of the lack of infrastructure.
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But that is only making entrepreneurs get excited about the opportunity. For instance, Chetan Maini, the pioneer of the electric car in India, after exiting his venture in favour of Mahindras is eyeing echarging space.
In an interview to ET on 5 May, Maini said: “The battery costs are coming down. If you take the battery and solar energy cost, the total cost is lower than gasoline.”
Maini’s Sun Mobility, will allow evehicles to refuel faster in terms of the batteries and is cheaper. “We are aiming for an open architecture where multiple OEMs can come together,” Maini said.
Mahindras sell e2o, which retails for a little less than Rs7 lakh in India and have developed electric cars in the Verito platform. These are yet to take off in big numbers.
In comparison, Tesla has set an ambitious target of making a million cars by 2020, which may hardly suffice to meet global demand.
Musk, who is worshiped globally for his out of the box thinking and for making the commercial production of electric cars a reality, received praise from unexpected quarters on Monday. Volvo on Monday decided to put all its resources on developing electric cars instead of backing advanced diesel engines for the future and credited Musk for changing the perception of electric cars.
Many industrialists in India, especially the big names have sought him out for his thoughts and also to gauge his mind on a possible partnership in India. Musk, however, has kept his cards close to his chest.