Indian EV Makers Can Easily Take On Tesla: Transport Minister Nitin Gadkari
Tesla is getting ready for an India entry. In the past few weeks, we have seen several pieces of news about the manufacturer's arrival in India. Owned by the world's richest man, Tesla's arrival could create questions among EV aficionados and those who follow the space. The Union Transport Minister Nitin Gadkari, however, is confident about what would befall homegrown EV brands after the American's entry. Speaking at a recent event, he said that the Indian EV makers will be able to more than hold their stands against Tesla.
The minister said "India is an open market and you're free to come here, manufacture and compete on cost. But our Indian electric car makers are no less and we have the best in terms of design, quality and technology right here today,"
Tesla And The Cost-Battle: What Could Possibly Happen?
Getting the prices right will be a 'make or break' factor for Tesla in India. The manufacturer should be able to compete on cost and value, as the minister pointed out, to win. The proposed India debut happens at a time when multiple Indian manufacturers are dominating the electric vehicle (EV) space with carefully curated, value-packed products.
Tata has been a long-standing leader in India's domestic electric mobility. Mahindra has revolutionised the space with the Electric Origin SUVs- the BE6 and XEV 9e which excel with the engineering they pack.
Due to extensive localisation, domestic manufacturing and a strong, loyal set of local suppliers, the Indian EV manufacturers are able to pull off disruptive prices for their products, deliver more value to the customer, and in the larger picture, scale. The modern Indian buyer is known to be willing to spend for value, and is in fact, on a hunt for the same.
Thus, in this competitive landscape, Tesla will have to adapt a lot and execute a smart localisation strategy to be profitable. Selling fully imported cars, which is known to be the American's plan initially, will hardly be profitable. Tesla seems to have realised this as well, and is now known to be exploring various localisation opportunities.
It wouldn't be the best option to make huge investments in India to set up a factory from ground up, and plan the supply chain, as the Trump administration wants U.S. automakers to bring manufacturing back to America. This seems to have forced Tesla to think about viable alternatives.
The carmaker is said to be exploring possibilities of potential contract manufacturing, whereby it will use a carmaker's existing facility to produce Tesla cars in India. Two manufacturers who are currently operating under the peak production capacity, are being considered for this partnership- one of which is rumoured to be Indian, and the other Japanese. Having access to their supply chain network would further enable Tesla to up its pricing game.
Other Key Remarks By Gadkari
The minister also said that the Indian automotive industry has had a transformation from a "cost-based sector to a quality-based industry". He further remarked that this approach will make India rank among the top automotive markets in the world. Now, it is the third largest car market in the world. The U.S. market ranks at the first position and China is the second.
"In five years, because of the increase in alternative fuel usage, improved cost and quality and electrification, we should be No. 1."- says Gadkari.
Talking about India's extensive infrastructure development projectss, he said that our roads will be better than those in the United States in the next two years. The minister also remarked that the Lithium reserves of Jammu & Kashmir could help in giving the country an upper hand in battery manufacturing, and possibly bring down electric vehicle prices further.