China's loss in India could be Elon Musk's gain
China's loss in India could be Elon Musk's gain.
Tesla has had a red-carpet welcome from India for its proposal to invest in the country, while its largest rival in electric vehicles, China's BYD, has been stopped cold by increased scrutiny from New Delhi.
The result could be an opening for Tesla to negotiate terms for an entry to the world's third-largest auto market without the competitive threat from BYD that it faces in other emerging markets, like Thailand.
"The future of who wins in India will have some bearing on who wins globally in the EV race," said Jasmeet Khurana of the World Economic Forum.
Since a meeting between Musk and Prime Minister Narendra Modi in June in New York, Tesla has fast-tracked closed-door discussions with officials on a potential plant investment and plans to build a new low-cost $24,000 EV.
Those talks continued over the past week with Tesla discussing minute details of its plans to gain access to India's fast-growing EV market, and Prime Minister Modi personally tracking developments, sources say.
Those meetings, though, have been strictly kept under wraps, with officials putting out no photos on social media of handshakes with executives which otherwise is a usual affair after high-profile meetings.
BYD, meanwhile, appears to be taking a backseat. Months after seeking clearance for its own $1 billion investment in India, BYD is no longer keen to pursue the approval, Reuters reported. In a further setback, BYD is facing an investigation over allegations that it underpaid import tax in India.
Among other concerns, Indian officials are worried about the national security implications of Chinese-made vehicles and the data they could collect. India is "uncomfortable with Chinese automakers," an official said.
While all investments from China have faced tightened approval requirements in India since a border clash between the two in 2020, there could be an outsized effect on the developing market for EVs in India because of China's dominance in battery materials, battery production and other technology.
Tesla, too, has Chinese suppliers that have helped it slash production costs at its Shanghai factory and it now wants to bring them to India - where it appears to have an upper hand in talks with New Delhi.
India has told Tesla it will allow its Chinese suppliers into the country if they forge partnerships with local firms, just like Apple did. But at the same time, India is hesitant on BYD's $1-billion plan even though that too was proposed as a partnership with a domestic engineering firm.
The Global Times, a Chinese state-run newspaper, said the reported pushback on BYD's investment plan "will lead to a chain reaction and deal a blow to the overall confidence of Chinese companies in investing India."
BYD has not commented on its $1 billion India plan while Musk, after meeting Modi, said Tesla plans to make significant investments in the country.
INDIA'S GROWING EV MARKET
Tesla wants to sell 20 million cars globally by 2030, up from 1.31 million in 2022, but faces hurdles to expanding its Shanghai factory.
BYD was the world's biggest seller of EVs and plug-in hybrids in 2022 with a total of 1.86 million units - the vast majority in China. It trails Tesla in terms of sales of fully electric cars.
"Tesla sees competition mainly with BYD, and both are expanding globally at great speed," said Gaurav Vangaal of S&P Global Mobility.
"If they want volumes, they have to come to India," he said, adding that with the government incentivising companies to build EVs locally, India can also serve as an export base.
Annual production of light electric vehicles in India is expected to rise to 1.4 million by 2030, close to 19% of total forecast production of 7.25 million, according to estimates by S&P Global Mobility. It was less than 50,000 in 2022.
India's EV market is dominated by Tata Motors, whose best-selling Nexon EV sells for as high as $19,000 while Chinese carmaker MG Motor's ZS EV starts at $28,000 while BYD's Atto 3 retails at around $41,000 in India.
Toyota Motor, Hyundai Motor and Kia all sell mid-sized gasoline SUVs priced at around $24,000, Tesla's identified entry point.
Tesla does not currently sell vehicles in India.
"Tesla has become a desirable product in name alone," said Sam Fiorani of AutoForecast Solutions. "Add to that an affordable product tailored for the Indian market and it has the potential to be a hit locally."
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)