Tesla, the California-based EV (Electric Vehicle) giant is finally coming to India. It plans to begin its journey in India with its Model 3 sedan, which makes perfect sense as it is the cheapest Tesla car.
Tesla has been trying to enter the Indian market for quite some time but has been unsuccessful due to lack of infrastructure, policies and the market. The Indian government had shown interest in Tesla, and Transport Minister Nitin Gadkari had offered the company land to import their technology, but India’s price-sensitive market was a roadblock. Indian consumers who are used to inexpensive small cars, may or may not respond well to Tesla’s powerful-but-pricey vehicles.
Gadkari told Indian Express that Tesla plans to “start operations” in the country in early 2021, beginning with sales of imported Model 3s. The company will consider manufacturing in India, but wants to wait to see how the market responds before making further plans.
The Indian EV Market
India’s vehicle market is unique. Maruti Suzuki, a local subsidiary of Japan’s Suzuki, has captured almost 50% of the market. Its bestseller, the Swift is a small hatchback with a starting price of 5.19 lakh, about $7,000. The top-selling non-Maruti car was Hyundai’s Creta, a small five-passenger SUV that starts at 9.82 lakh, or $13,400. So, one can conclude that Indians buy cars at prices that are way less than Tesla’s.
As far as EVs are concerned, the two-wheelers dominate the market in terms of volume owing to the growing middle class and youth population.
On a more optimistic note, Christie Fernandez, the founder at Sooorya EV, believes that Tesla will increase the demand for EV in general. It may struggle to attract customers initially but,
“A lot of tech millionaires may want to flaunt owning a Tesla, and it may become a second car for many rich households,” Fernandez said.
However, a very low-cost model will definitely help raise its sales in the country.
It is a sedan of around 4,694 mm in length, longer than executive sedans like Hyundai Elantra and Honda Civic. So, a much larger space is guaranteed along with 425-litres of luggage space. The interior boasts an uncluttered dashboard and a 15-inch touchscreen. It is decorated with additional features like tinted glass roof, 12-way adjustable seats, heated seats, two wireless charging pads, 15-speaker sound system, and a host of advanced driver assistance systems like auto-park, auto lane change, etc. Model 3 does have an Autopilot feature but it will most likely be unavailable in India due to the high intensity traffic here. It is equipped with a a lithium-ion battery with dual electric motors. The standard model offers a driving range of 402.3 km/charge and can go from zero to 96.56 km/h in 5.3 seconds. Tesla Model 3 Long Range AWD variant, however, can offer a range of almost 518 km on a single charge and can sprint from zero to 96.56 km/h in 4.4 seconds. Tesla Superchargers can charge up Model 3’s battery to cover 281 km in 15 minutes and a standard charging point is likely to take around 20 hours to completely charge the battery while a 7 kW charger could do it in around 8.5 hours.
As Tesla is expected to bring in its cars by the CBU (completely built-up) route, the prices will be quite high. For instance, Model 3 starts from $38,000 in the US, which is ₹27.88 lakh in INR. In India, it may cost around ₹75 lakh, which is mych more expensive.
What Tesla Hopes For?
Tesla recorded an annual worldwide sales of 1 Million vehicles till October 2020 and plans to raise it to 20 Million vehicles by 2030. At the time of releasing Tesla’s third-quarter earnings, Musk said, “I’m not saying for sure we’ll hit 20 Mn vehicles. But it does seem like a good goal to have because that would mean that we’re replacing 1% of the global fleet per year.”
How much of a thrust can India provide to this goal of Tesla is debatable. At present, India is actively participating and implementing its green plans. According to a McKinsey & Company report, now the electric vehicle adoption rate is less than 1% but the government has targeted 30% electric vehicle adoption by 2030. But this is to be primarily achieved by the electrification of two-wheeler, three-wheeler and commercial vehicles.
Also, the low availability of charging stations is another issue of concern. As per MarketWatch, at present, there are about 250 public charging stations operating in India. However, as per Kenneth Research, the EV infrastructure market in India is expected to grow at a compound annual growth rate of over 40% during a forecast period 2019-2025. India’s Energy Efficiency Services Limited predicts that the country will have 79 Million electric vehicles along with 8 Mn public charging stations (slow and fast) by the end of the next decade.
Fernandez added that India can become a strategic market for Tesla Right-hand vehicles. “India can also become a R&D hub, similar to other auto manufacturers having R&D centers in India, including Mercedes Benz,” he said. The upcoming R&D unit in Bengaluru will ensure that Tesla will not be short of any market data or ideas to take on the Indian electric four-wheeler market whenever it decides to launch fully.
Are EVs eco-friendly?
When comapared to combustion vehicles, EVs are definitely a better option but they are not completely green. Apart from the environmental cost of the batteries used and the manufacturing process, the dependence of EVs on electricity that is mostly manufactured using non-green sources is a problem. Many climate change observers and those studying the impact of automobiles on environment believe that first countries should focus on generating clean energy and then establish an EV market.
Manufacturing an electric vehicle contributes twice as much to global warming and uses double the amount of energy requires while producing a combustion engine car. But these higher emissions during the manufacturing stage are paid-off after two years as compared to driving an average conventional vehicle, which reduces to one and a half years if the car is charged using renewable energy.
“Battery production uses a lot of energy, from the extraction of raw materials to the electricity consumed in manufacture. The bigger the electric car and its range, the more battery cells are needed to power it, and consequently the more carbon produced,” said Alekhya Datta, fellow, electricity & fuels division, The Energy and Resources Institute (TERI). Chemicals like lithium, nickel, cobalt, aluminum oxide or lithium-ion phosphate are energy-intensive. The lithium-ion batteries used in Tesla are made using a ‘slurry casting’ process, whereby the active materials are mixed in a wet slurry and coated onto thin foils of aluminium or copper, then dried and compressed. This process also requires a lot of energy. The mining and processing of such metals require high energy and releases toxic compounds. The electrolyte and salt (LiPF6) used in the common li-ion batteries as separator are mainly organic compound which is hazardous to health when exposed to the human. “The biggest fight today in the material research field is, how to make safer batteries or completely replace the liquid electrolyte with solid material to reduce the toxicity and hazardness,” Datta said.
“Newer battery technologies such as (Li-air, Li-metal and solid-state batteries, etc.) may resolve these problems in the future in the commercial state. Thus, the main source of emission comes mainly during the mineral extraction from mines, separation, mixing and drying method using energy source for batteries,” added TERI’s Datta.
All in all, introduction of Tesla into the Indian market can be considered a positive step towards the fulfillment of greener initiatives, provided India takes actuve steps to invest more on renewable energy generation and Tesla comes up with cheaper versions for the mass market. Only when a majority of the population is able to afford the Tesla EVs, will it be profitable for the company and India.