India’s Hot, Tesla’s Cold

THE TAKE 

India’s Tariffs Didn’t Stop Other Car Makers, What’s Stalling Tesla?

American electric car maker Tesla’s share price has decreased by 41% this year, its revenue has dropped by 9%, and profits have plunged by 71% in the first quarter. Additionally, its year-on-year automotive revenue is down 20%.

It is being pummelled by Chinese EV giant BYD in China and elsewhere in the world because of issues with its own brand, and the shifting sands in the EV market.

Another fun fact — Tesla has lost all its Trump Bump gains. Its stock was quoted at $237 as of Wednesday, around the levels it was at on November 4, 2024. On December 17, the stock price had peaked at $479. 

Under these circumstances, during an earnings call on Tuesday, Tesla CFO Vaibhav Taneja, originally a chartered accountant from India, said the company was still evaluating when to enter India’s "very hot" market. He said that Tesla sees India’s 100% tariffs on cars making customers anxious.  

“The same car which we're sending is 100% more expensive than what it is. So that creates a lot of anxiety. People feel OK, they're paying too much for the car ... That's why we've been very careful trying to figure out when is the right time (to enter India)," Taneja was quoted by Reuters as saying on the call where he also added that India was a very hard market. 

The market is hot, hard and great, thanks to its big middle class. That India won’t be an easy market for Tesla was highlighted in this column last month. 

Is Tariff Really The Problem?

The bit about the 100% duty is, of course, true. But that same formula applies to several car makers, including the German ones who import some of their cars, lock, stock and barrel, and thus pay 100% duty. 

The German cars are a more premium range — and not in the mid-range segment, of around Rs 30 lakh or less,  that Tesla would hope to compete in — not a large market in any case. 

Chinese Tesla beater BYD, meanwhile, has four models in India, starting at Rs 25 lakh and going up to Rs 49 lakh. BYD has been in India since 2007 with manufacturing plants for various components, including batteries in Chennai, and brought in its first electric buses into India in 2013 and cars in 2021.

Last month, BYD said it had developed a technology that could offer around 400 km of range on its cars with just five minutes of charging, around the time it would take you to fill up the gas tank.

Meanwhile, CATL, the world’s largest supplier of EV batteries, also Chinese, said on Monday that its latest battery could provide 520 km of driving range in the same five minutes of charging time.

Tesla’s latest superchargers can add up to 270 kilometres of range in 15 minutes, most reports say.

The latest battery technology from BYD is not in India yet, though its cars are of course here. But Tesla is not here yet. 

India is openly wary of BYD’s investments in the country for larger security reasons and is openly welcoming Tesla. And yet, Tesla is dragging its feet while BYD is grabbing every opportunity possible and wants to invest in India, if only allowed to.

And clearly it seems to be lagging in the most critical aspect of the EV technology battle, at least from the consumer’s viewpoint, a distance that can be travelled on a full charge and the time taken to charge. 

Meanwhile, Tesla’s sustained hesitation to enter India or its evident attempt to wait it out for duties to fall runs somewhat contrary to how any company would approach a ‘hot market’

To be fair, Tesla has finalised modest showroom space in Delhi and Mumbai and posted more than two dozen jobs. The Teslas that could be sold here would likely come from Germany at a shipment value of around $46,000, going by a Reuters report quoting the import of one such model.

This is almost Rs 40 lakh.

Tesla lovers will likely go for it at that price, and at the four owners I know world over personally love their Teslas even if they may not pay that price for it here.

Musk’s Priorities Vs India’s

Meanwhile, Indian manufacturers are pushing back at any possible move by the government to appease Tesla, including companies like Tata Motors and Mahindra and Mahindra, who have been sweating it out in the EV market in recent years and innovating at the same time.

The Indian Government has proposed a new policy that could see EV tariffs fall from about 70% to 15% for firms that plan to localise some manufacturing in the country.  Tesla CEO and Indian Prime Minister Narendra Modi spoke to each other last week and posted the fact that they did on social media for all to see.

All of this has not changed Tesla’s surprising sluggishness in entering India, considered by all global auto giants as a long-term market. 

And then there is the larger tariff war everyone is consumed by, and which India has thankfully declined to participate in.

Tariffs are a good reason to consider how to calibrate entry into a market like India. But it should not be the only reason to not enter or delay entry. At least that’s not how other global auto giants have moved when it comes to an India market strategy.

Reports also suggest that Musk’s focus is now on self-driving cars and then humanoid robots called Optimus that could launch this year because that is where the future valuations lie.

Cynics point out Musk is actually losing interest in cars, at least the plain vanilla electric ones.

Well, here is some news. 

China is catching up quite rapidly on humanoid robots, too, you can see their dancing videos on the internet. 

Last week, some 20 humanoid robots ran a half marathon in Beijing, alongside thousands of human runners.

In any case, a labour surplus market like India may not be really looking for humanoid robots, unless it is for strictly industrial applications. 

On self-driving cars, well, that is the least of India’s priorities right now.

CORE NUMBER

$571 million

That’s how much the American multinational technology company Apple has been fined by the European Union (EU) for violating the bloc’s tough new digital competition rules under the Digital Markets Act (DMA). Facebook’s parent company Meta, was also hit with a $228.4 million fine for similar reasons. Apple was penalised for blocking app developers from directing users to alternative payment options outside its App Store, breaching the DMA’s ‘anti-steering’ rules. The EU has now ordered Apple to drop those restrictions. Meta, meanwhile, was fined for making users choose between accepting data tracking or paying for ad-free access. The company slammed the move as unfair and harmful to European businesses.

—India Responds. In one of its first responses to the terror attack at Pahalgam, Kashmir, the govt has decided to suspend the decades old Indus Waters Treaty for an indefinite period until Pakistan stops supporting cross-border terrorism. The Cabinet Committee on Security that met in Delhi also decided to close the Attari-Wagah Integrated Check post, which will lead to disruption in trade and travel. All Pakistani nationals currently in the country have been asked to leave within 48 hours while Defence, Military, Naval, and Air Advisors from the Pakistani High Commission in New Delhi have also been expelled. India will also reduce its diplomatic staff in Pakistan from 55 to 30 by May 1.

—🇺🇸🇨🇳 Lessened Tensions? As the world watches with bated breath the trade tensions between China and the US, there now seem to be signs of relief. Two reports, in Reuters and Wall Street Journal, suggest that the US is willing to negotiate and considering cutting the steep tariffs it imposed on China. The WSJ report cited a White House official saying that the tariffs could come down to between 50% and 65%. This and US president Donald Trump going back on his threats to sack Federal Reserve Chair Jerome Powell reflected positively on Wall Street indices, with Dow Jones, S&P 500 and Nasdaq rallying.

—⏫️ On A High! India’s private sector output is off to a good start this financial year. HSBC’s flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, showed a rise to 60.0, up from a revised 59.5 in March, the fastest growth seen in the sector in eight months. Meanwhile, the HSBC Flash India Manufacturing PMI showed the strongest improvement in a year at 58.4 in April, up from 58.1 in March. Pranjul Bhandari, chief India economist at HSBC, said this growth was triggered by new export orders due to the 90-day tariff pause. “As a result, output and employment grew, for both manufacturers and service providers,” Bhandari said.

—🧾 Startup Scrutiny Intensifies. The board of BluSmart has initiated a forensic audit of its books, appointing Grant Thornton amid whistleblower allegations of financial fraud, reports The Economic Times. The probe follows BluSmart’s shutdown of ride-hailing operations after running out of cash, despite earlier claims of having Rs 400–500 crore in reserves. The crisis began with liquidity troubles at sister firm Gensol Engineering, which prompted the markets regulator, Securities and Exchange Board of India, to investigate fund diversion. As The Take noted last week, governance failures and fund opacity across startups are partly driving the government's increased scrutiny of foreign investments and fund inflows.

👥 THE TEAM

✍️ Zinal Dedhia, Salman SH, Kudrat Wadhwa | ✂️ Rohini Chatterji | 🎧 Joshua Thomas