Will Tesla Motors Inc (TSLA) Be A Hit In India?

Tesla stockBlomst / Pixabay

Tesla Motors Inc (NASDAQ:TSLA) wants to launch its product in India, or at least rumors suggest so. Indian buyers are fond of luxury-brand SUVs. Although the Model S from Tesla is not an SUV, the price of Tesla’s vehicles in India is be equal to the luxury SUVs the upper class buys, says a report from Business Insider. Also Indian buyers are very much concerned with the brand, which is evident from the success of brands like BMW and Mercedes-Benz. Both companies garnered high sales even though their prices were high.

Earlier, Chief Financial Officer Deepak Ahuja said, “India is a huge potential market where we need to be. I think sometime in 2015 seems to make sense to enter India, but it’s difficult to make an official announcement.”

Tesla: the journey so far

Tesla Motors Inc (NASDAQ:TSLA) commanded unparalleled success at a time when bigger automobile players failed miserably on the green fuel vehicle front. Tesla held its IPO in 2010 and became one of the most successful companies to raise money from the market.

After tremendous success in Europe and the United States, Musk aimed towards Asia. In 2010, the EV manufacturer started its operations in Japan in the town of Aoyama and then expanded to Osaka. In that very year, Tesla expanded into Hong Kong, and users were able to design their cars on a large touch screen. In 2014, Tesla Motors Inc (NASDAQ:TSLA) entered China where the road to success is filled with lot of bumps, unlike in the U.S. and Europe. Developments in Asia suggest that the next target of the company will be India.

India not an easy market

Tesla Motors Inc (NASDAQ:TSLA) may be admired by upper class Indian buyers, but these customers already own a fleet of cars, and for them, buying a Tesla Model S would just be like  “checking out” their new gadget. There are hardly any cities in India except for a few which could offer the infrastructure required to built a charging station for Tesla cars. Moreover, the car is not affordable to the average car owner due to its high price tag. Selling Tesla in India is a tough nut to crack.

Also Tesla Motors Inc (NASDAQ:TSLA) uses original equipment, for which it would need to establish an OEM facility in India. This would be challenging, as India has stricter labor laws than the United States. Also in the United States, Tesla gets a massive tax exemption, but there is no such provision in India.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

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