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Tesla needs to produce cars in India to scale, keep price between Rs 25-30 lakh: CLSA

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New Delhi, Feb 21: In order to scale in the expanding Indian electric vehicle (EV) market, US major Tesla will need to manufacture its cars within the country and price them in the Rs 25 lakh-Rs 30 lakh range, global brokerage CLSA said on Friday.

According to CLSA, Tesla would need to establish manufacturing in India to scale up with its current portfolio and “price its vehicles at less than Rs 3.5-4 million (around Rs 35-40 lakh) on-road, even if import duties are reduced to sub-20 per cent levels”.

The brokerage further said in its note that Tesla’s entry would not have any significant impact on domestic players like Maruti Suzuki India, Hyundai Motors India and Tata Motors, as penetration of India of EVs in India is evolving and offers plenty of growth opportunities. India’s EV penetration stands at an estimated 2.4 per cent.

The average selling price of cars in India is $14,000 (or more than Rs 12.13 lakh), whereas the cheapest Tesla model in the US is sold at $35,000 or around Rs 30.3 lakh, according to the brokerage.

If Tesla positions itself with Model 3 at an on-road price that is 20-50 per cent higher than models like Mahindra XEV 9e, e-Creta, e-Vitara etc, then it “would not significantly impact domestic EV models”, said the brokerage. If Tesla launches an EV at a price of $25,000 (Rs 21.6 lakh), then the features and specifications would be “meaningfully compromised versus its traditional models”, according to CLSA.

As Tesla gears up to enter India this year, the government is reportedly working on modifying the terms of a new policy that promotes the manufacturing of EVs in the country. The Centre may also offer further import duty relief. According to industry experts, a cheaper Model 3, which is the entry-level Tesla, can only be possible with local manufacturing of battery components and a strong EV supply system.

The cost reduction could be achieved if Tesla cars manufactured in the country come with fewer features compared to the ones available globally. In the new EV policy unveiled last year, the Indian government has cut the customs duty to 15 per cent (with certain riders) from the earlier 100 per cent on imported cars. A minimum investment of Rs 4,150 crore (about $500 million) will be required to set up the manufacturing facilities for EVs in the country.

IANS

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