Transport minister Gadkari says Tesla is in India soon. Known for its transformative electric vehicles technologies, the Elon Musk-promoted auto company can disrupt India’s fledgeling but booming e-vehicle sector significantly. But will it help make an impact on mass transport in India?
When is Tesla coming to India? We don’t know about that yet. But Indian fans of the Elon Musk-promoted electric car company can rejoice in 2021. It’s official: Tesla is planning to set shop in this market. On December 28, union transport minister Nitin Gadkari said Tesla would start operations in India early 2021. The electric-car maker would start with sales and move to assembly and making based, said the minister.
Since 2015, Tesla has been planning to come to India and, finally, it’s ready to make the grand entry. Founded in 2003 and went public in July 2010, Tesla has been a trendsetter in the passenger vehicle industry. The company’s market valuation crossed $700 billion in 2020. Its market capitalization changed gears to cross over $500 billion last year. Tesla’s market value now equals the combined market cap of the nine largest car makers.
The world of Tesla
Tesla is the world’s top-selling plug-in and battery e-car maker. In 2019, it had a market share of 17 per cent in the plug-in segment, and 23 per cent in the battery-electric market. Tesla sold 367,849 vehicles in 2019. That was a 50 per cent increase from 2018. Tesla’s Model 3 is the world’s all-time top-seller plug-in electric car. So far, more than 500,000 units of the Model 3 have hit the road. Tesla has also installed large battery-storage plants across the world and supplied 1.65 GWh of battery storage in 2019. With Model 3, Tesla is targeting broader customer segments. It also wants to expand global sales.
Today, it has showrooms in Australia, Canada, China, Japan and Mexico and across Europe. It has a final assembly facility in Tilburg, the Netherlands that opened in 2013. That said, it wasn’t until 2019 that Tesla began producing vehicles outside the US. In late 2019, Tesla started producing electric vehicles at its factory in Shanghai. Tesla is building another plant in Berlin as well as in Texas.
In 2016, Tesla had collected a $1,000 deposit from interested buyers in India. Those consumers are still waiting for their cars. In 2017, Musk said his cars could come to India in the summer. But the plan did not pan out owing to a lack of proper infrastructure. But now, the road is ready, it seems.
India’s e-vehicles market
But Tesla is not India’s first date with e-cars. A few companies are running their electric cars in India. Maruti Suzuki, Hyundai, Tata Motors, Mahindra, Morris Garages and Mercedes have rolled out e-cars in India. India’s first e-car Reva from Mahindra Electric arrived in 2001. India’s e-car industry is gaining steam.
Currently, models such as Hyundai Kona Electric, Tata Nexon EV, MG ZS EV, Mercedes-Benz EQC, Tata Tigor EV, Mahindra E-Verito, Mahindra e20 Plus are running on India’s roads. This year, more automakers are planning to go EV. Many global automakers have unveiled big plans for India. They include Mercedes-Benz which has brought the ‘luxury EV’ concept to India with its EQC electric SUV. A few of them are hoping to bank on the budget (low-cost) EV segment.
India had its first electric bus in Bangalore in 2014. States such as Himachal Pradesh and Maharashtra started using e-buses in 2019. States such as Delhi run electric rickshaws. Indeed, e-vehicles help reduce emission and pollution. Transport is one of the biggest polluters across the globe.
Is e-commute the future for transport in India?
To answer that, let’s look at how public transport has changed over the years in the country. Transportation plays a vital role in the Indian economy. The history of modern transport in India begins with the British. Before the Raj, it was all about bullock carts and packhorse. The British brought in massive changes in transport. The first Railway line running from Bombay to Thane went live in 1853.
In 1947, the year of Independence, India had 42-odd railway units. In 1951, a nationalisation drive rolled all of them into one, forming one of the largest networks in the world. But road transport was still a tall order. Most Indians used to travel by road then.
But soon, buses, two, three-wheelers, cars, utility vehicles, taxis and vehicles of all hues entered India. They played a key major role in transforming road transportation. India’s road network became the second-largest and one of the busiest in the world. Indian roads ferry 8.2 billion passengers and over 980 million tonnes of cargo a year (2015). But with the increase in vehicles came an alarming rise in air pollution.
India’s e-vehicle mission
In 2017, the Centre said that by 2030 India would be selling only electric vehicles. By 2022, all trains would run on electricity. The Centre wants to make India a manufacturing hub for electric vehicles in five years. Gadkari has asked Indian auto companies to boost their e-vehicle technology. He wants them to focus on finding alternatives to lithium-ion battery tech. He says this will help make India the next global manufacturing hub for e-vehicles. Clearly, there is a push for e-cars in India. Gadkari says many companies are working on making e-vehicles affordable for the public.
In 2013, India unveiled the National Electric Mobility Mission Plan 2020. The plan aims to enhance fuel security by promoting hybrid and electric vehicles. The mission aims to provide affordable and eco-friendly transport. It wants to make India’s automotive industry a global leader in manufacturing. This means business. India’s auto industry contributes 22 per cent to the manufacturing GDP. Thanks to the policy, the number is likely to increase to 25 per cent by 2022.
To further the mission, the Centre rolled out a new plan. It is called FAME: Faster Adoption and Manufacturing of Hybrid and Electric vehicles. FAME provides incentives for purchasing e-vehicles. Phase I of the scheme lasted from 2015 to 2019. Phase II began in 2019 and is likely to finish in 2022.
Under FAME, Delhi approved 1,000 low-floor AC e-buses for public transport. Tamil Nadu launched the Mauto Electric Mobility electric auto rickshaw in 2019. Many call these India’s first retrofit electric autos in India. Karnataka approved an Electric Vehicle and Energy Storage Policy 2017. Uttarakhand introduced a new scheme to help make and promote the use of EV’s in 2018.
That looks promising.
India’s e-vehicles sector faces a lack of investment and infrastructure (charging stations, etc.). The government hopes Tesla’s entry can make a difference here. Tesla is likely to launch the Model 3 in India. It is the cheapest among Tesla vehicles. Here, it is expected to cost Rs 55 lakh ($75,000) this year. But the average starting price of an EV in India is under Rs 10 lakh. The bookings for Tesla will start this January, say reports. For now, Tesla will be importing the cars as completely built units. It won’t be selling them via dealerships. The company is also planning to focus on online sales.
But many ask an interesting question when Tesla enters India. Will this make a difference to India’s public transport? Will it introduce new technologies or infrastructure that would make e-vehicles a part and parcel of India’s public transport system? Given Musk’s dislike for public transport and Tesla’s extravagant focus on private transport, it is highly unlikely that the public will benefit much.
Recently, he said that he thought public transport was “painful”. “It sucks,” he said. “Why do you want to get on something with a lot of other people, that doesn’t leave where you want it to leave, doesn’t start where you want it to start, doesn’t end where you want it to end? And it doesn’t go all the time.”
Looks like public transport will have to wait for the Musk moment. Good luck, India.