Tesla discussing making of EVs in India

Tesla’s plans to make a competitively-priced Electric Vehicle, and it seems to be working out various plans in various manufacturing platforms. Right now, Tesla is building a manufacturing facility in Mexico to roll out a cheaper car and it knows full well that to become the leader of the automobile market is to make the EV cheaper. It is the mass production of the EV that will bring down the costs, and Elon Musk is fully aware of it.

The Tesla EV made in China is priced at $32,200. In the Indian market, the $24,000 price tag is on the higher side. It is two million or 20 lakh (1 lakh is equal to 100,000) rupees. This would be beyond the reach of many in the Indian middle class. The Indian automobile market is the third largest in the world, and EVs form less than two per cent of the market. India then has huge potential. The Indian government too is keen to promote the EV as a way of improving its carbon emission performance. Initially, Musk wanted to export the EVs to India and he wanted reduction in import taxes. This was not acceptable to the Indian government, which wanted Tesla to manufacture the cars in India. It is learnt that Tesla’s representatives are to meet India’s Commerce Minister Piyush Goyal soon to discuss the nitty-gritty of the project.

Musk had met Indian Prime Minister Narendra Modi on the latter’s recent visit to the United States, and Musk had promised to make substantial investment in India. In many ways, both sides are bargaining hard, and when a deal is made Tesla and the Indian government would feel that they got the best of the bargain.

Musk has the first mover’s advantage in the matter of eco-friendly electric vehicles, but it is unlikely that he can hold on to the commercial advantage of a first mover for too long. The other major car-makers all over the world would be churning out their own versions of the electric vehicle, and the market would be sufficiently crowded.

More importantly, many countries have not yet adequately addressed the challenge of the support system in terms of manufacturing batteries and in setting up the charging stations even for the small amount of EVs that are on the roads across the country. The problems of scaling up the production of EVs will remain a huge challenge, and it will take some time even for Musk, who has the daring and the imagination, to face a new situation, to work out the logistics of making the EVs the ideal alternative transport mode in the face of climate crisis. But it may not happen overnight.

Musk’s success in putting serviceable rocks for spaceflights was easier done because the technology and support systems were all there and they needed a bit of tweaking. And the scope and demand is absolutely limited. In the case of the EVs, much more elaborate planning is required because here the demand is on a massive scale.

There were 1.45 billion vehicles in the world in 2022, and plug-in vehicles (partly run on electricity) were 6.6 million, and this shows what the challenge of scaling up the numbers of EVs is.

Many of the car-makers are also working on the hybrid models of part petrol and diesel, part petro and ethanol, and part petrol and electric. It seems to be working on a limited scale because the efficiency levels of energy consumption is not yet perfect. It can be argued that despite many hiccups, the EV is indeed the car of the future. And it does not matter if it takes another decade before it becomes the dominant mode of the automobile.