Everything Tesla and its enigmatic founder Elon Musk do is in the news. To the extent that the mere registration of an entity in India creates a stir, even if the company has remained silent. While a trip to India may take some time, a recent report on Tesla's €25,000 hatchback should certainly add to that buzz. The world's largest electric car company, which recently started operations in China, is reportedly developing and manufacturing its much-anticipated hatchback version that could be the first affordable Tesla model. And the vehicle is designed and manufactured in China for global markets. A Chinese automotive website quoted a senior Tesla official at the Shanghai plant as saying the upcoming €25,000 sedan would be built in China using native parts and exported to other global markets. What would be the ramification of this report and how does Tesla plan to bring these cars to an extremely price sensitive Indian market?
A Tesla for price sensitive markets
The Gigafactory Shanghai entered service in early 2019 with an installed capacity of 250.000 Tesla Model 3 vehicles. By the end of 2021, that number could reach 450.000 and become Tesla's first major R&D center outside the United States. . Given Elon Musk's claims to offer a cheaper electric car in the order of €25,000 (around Rs. 18 lakhs) for price-sensitive markets, it's no surprise that Shanghai was chosen to develop and build the model. The vehicle, often referred to as the Tesla Model 2 to describe it as a cheaper variant of its popular Model 3, is expected to be a clean hatchback version on the same platform. In other words, it can happen with lower specs. The one that Tesla hopes to launch in India soon, as an overturned kit could cost upwards of 50 Lacs. According to the report by the Chinese auto publication, Tesla's Chinese president Tom Zhu says the new, cheaper sedan could be ready for launch within a year. Perhaps that explains the capacity expansion numbers Tesla hopes to achieve in 2021.
The anti-China challenge and Make-in-India
And this is where things would get interesting from now on. Make no mistake that for Tesla to gain traction in India's price-sensitive auto sector, it would require not one, but a few additional options. Perhaps even a stripped down version of the upcoming sedan given that the most popular segment of the passenger car segment in India is in the price range of Rs.6 Lacs to Rs.10 Lacs. Of course, though such a drive may take a while, although India has its own cohort of battery-powered vehicles. The Tata Nexon EV retails for between Rs. 14 Lakes and Rs. 16.5 Lakes, while the Tata Tigor EV costs between Rs 9.5 Lakes and Rs 10 Lakes. The others, like the Hyundai Kona Electric, are priced above Rs. 23 Lakes mark the latest MG ZS EV released earlier this month. There is no question that a company of the likes of Tesla has a role to play in India, but what would be critical is how the company plans its entry and when it would be part of supporting affordable vehicles. And the upcoming €25,000 sedan seems to be the right one for the Indian consumer. However, it remains to be seen if Tesla can convince New Delhi to allow CKD imports from the new sedan, given the Chinese connection. The rising anti-Chinese mood was visible around the ban on TikTok and various other apps that had a connection to India's eastern neighbours. We know that Tesla is a world leader in electric vehicles and the only way to maintain its position will be to expand into price-sensitive markets such as China and India. And this is where non-premium vehicles would have an impact. For now, the Tesla Model 2 could be the answer, which China reports should undergo an environmental impact assessment. Via