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In India, it's advantage Tesla



Tesla's proposition to invest in India has been met with open arms in India. Tesla may have the opportunity to negotiate terms for entry into the world's third-largest auto market without the competitive threat from BYD that it faces in other emerging markets, such as Thailand.


According to Jasmeet Khurana of the World Economic Forum, the prospective victor in India will have an impact on the global winner in the EV race.


Since Musk's June meeting with Indian Prime Minister Narendra Modi in New York, Tesla has accelerated behind-closed-doors discussions with Indian officials regarding a prospective plant investment and plans to construct a new $24,000 EV.


According to sources, these discussions continued over the past week, with Tesla discussing minute details of its plans to obtain access to India's rapidly expanding EV market and Modi personally monitoring developments.


These encounters, however, have been kept strictly under wraps, with no photos of handshakes with executives being posted on social media as is customary after high-profile meetings.


BYD, on the other hand, seems to be taking a back position. Reuters reported that months after seeking approval for its own $1 billion investment in India, BYD is no longer interested in pursuing the approval. In an additional setback, BYD is being investigated for allegedly underpaying import tax in India.


China's dominance in battery materials, battery production, and other technologies may have an outsized impact on India's developing electric vehicle (EV) market, despite the fact that all Chinese investments have been subject to stricter approval requirements in India since a border conflict in 2020.


Tesla also has Chinese suppliers that have helped it reduce production costs at its Shanghai factory, and it now wants to bring those suppliers to India, where it appears to have an advantage in negotiations with New Delhi.


India has informed Tesla that it will permit its Chinese suppliers to enter the country if they form partnerships with local businesses, similar to Apple. However, India is uncertain about BYD's $1 billion plan, which was also proposed as a partnership with a domestic engineering firm.


BYD declined to comment on the status of its India investment plan or the import tax claim. In a statement to Reuters, the company noted that it has been selling commercial vehicles and passenger automobiles in India for the past 16 years.


Tesla did not respond to a request for comment regarding its discussions with Indian government officials. Musk stated in June that Modi "is pressuring us to make substantial investments in India, which we intend to do."


The growing EV market in India


Tesla aims to sell 20 million cars worldwide by 2030, up from 1.31 million in 2022, but expansion of its Shanghai factory presents obstacles.


In 2022, BYD sold a total of 1.86 million EVs and plug-in hybrids - the overwhelming majority of which were sold in China. In terms of sales of completely electric vehicles, it trails Tesla.


"Tesla's primary competitor is BYD, and both companies are expanding globally at a rapid rate," said S&P Global Mobility's Gaurav Vangaal.


"If they want volumes, they have to come to India," he said, adding that with the government incentivizing local EV manufacturing, India can also function as an export hub.


S&P Global Mobility forecasts that the annual production of light electric vehicles in India will increase to 1.45 million by 2030, representing approximately 19% of the total forecasted production of 7.25 million. In 2022, it was less than 50,000.


India's nascent EV market is dominated by Tata Motors, whose best-selling Nexon EV costs as much as $19,000, while Chinese automaker MG Motor's ZS EV begins at $28,000 and BYD's Atto 3 retails for approximately $41,000.


Toyota Motor, Hyundai Motor, and Kia all sell mid-sized petrol SUVs for approximately $24,000, Tesla's target price point.




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