EXCLUSIVE: Why Tata Motors CEO is not worried about Musk's Tesla coming to India

EXCLUSIVE: Why Tata Motors CEO is not worried about Musk's Tesla coming to India
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  • Speaking at the Business Insider Global Trends Festival 2020, Tata Motors’ MD & CEO said that they are not competing with Elon Musk’s Tesla in the Indian market.
  • Butschek also added that for sustainable mobility to thrive, just rolling out electric vehicles is not enough, there is a need to build a strong ecosystem as well.
  • While the government is offering a set of incentives for EV makers and buyers in India, analysts feel that this is not enough to attract foreign EV makers to India.
As Tesla’s CEO Elon Musk gears up to venture into Indian electric vehicle (EV) market, one of India’s largest car makers, with an EV plan of its own, Tata Motors says it isn’t worried about it at this stage.

“We are not competing with Tesla in the Indian market,” said Guenter Butschek, the Managing Director and CEO of Tata Motors, in an exclusive conversation on day one of the Business Insider Global Trends Festival 2020. “If Tesla will be imported and will be sold in the Indian market, it may find its customers. Is it about copying Tesla? From my point of view it is a no,” he added.

And, even Elon Musk himself admitted and said in a tweet that “I am told duties are extremely high in India (up to 100%) even for electric cars. This would make our cars unaffordable.” Suraj Ghosh Principal Analyst at IHS Markit explained that the current EV policies in India encourage ‘Make in India’ projects, basically to use India as a manufacturing base.

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The government revised GST for Indian EV makers to 5% as compared to the 29-50% range applicable for internal combustion engines vehicles. “No special support available for EVs which are not manufactured in India and will attract the usual duties/taxes,” he added.

India’s auto industry - Import duty
Criteria / ApplicabilityImport Duty in %
Used Cars125%
Cars CBUs whose CIF value is more than $ 40,000 or Petrol Engine > 3000 CC or Diesel engine > 2500 CC100%
Cars CBUs whose CIF value is less than $ 40,000 and Petrol Engine < 3000 CC and Diesel engine < 2500 CC60%
Source: SIAM

Butschek’s argues if the goal is to have sustainable mobility, one that does not harm the environment, just rolling out electric cars is not enough. “Clean mobility is just not the question of something that comes in two, three, four or many wheels. It is actually about establishing an ecosystem. It is a call out for a strong supportive ecosystem as imperative in order to try for the electrification journey by the same point of time we need to make sure that electric mobility is going to become affordable.”

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Lord Adair Turner, the Chairman of the Energy Transitions Commission, agreed with Butschek. “You need to get the carbon intensity of your electricity below about 650 grams per kilowatt hour in order to ensure that when somebody buys an electric car, they have less emission than if they had an internal combustion engine,” Turner said. Essentially, all nodes in the value chain, including the factory manufacturing it upto the purchase of the car, have to reduce emissions for EVs to be successful.

Lord Turner recommended that all additional power capacity that is built in India should be from renewable sources to reduce the emission intensity.

EXCLUSIVE: Why Tata Motors CEO is not worried about Musk's Tesla coming to India

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India’s push for electric vehicles is good but not good enough yet

While the government is offering a set of incentives for EV makers and buyers in India, analysts feel that this is not enough to attract foreign EV makers to India.

Indian Government offers incentives upto ₹2 crore to EV buyers under FAME Scheme II
SegmentNumber of vehicles supportedApprox battery sizeIncentivesMax factory price
Registered 2-wheeler10000002KWH₹ 20,000₹1.5 lakh
Registered 3-wheeler5000005KWH₹ 50,000₹ 5 lakh
Registered 4-wheeler3500015 KWH₹ 1,50,000₹ 15 lakh
4-W strong hybrid vehicle200001.3KWH₹ 13,000₹ 15 lakh
e- bus7090250KWH₹ 50 Lakh₹ 2 crore
Source: FAME II

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While the car buyers are encouraged to go for the electric variants, there are other gaps that need to be filled for EVs to take off. “At present, the infra is nowhere close to what is available in other key EV markets. When it (Tesla) enters India, it has to come in for the long haul. It may well create a lot of buzz, but it might have to be satisfied with being a niche player for some time. It cannot expect the same trajectory of demand as it’s experiencing in China since its entry,” Ghosh said.

Here’s what China did to promote EVs
ChinaIndia
China started the "863 EV Project" in 2001India unveiled the 'National Electric Mobility Mission Plan 2020' in 2013
As of 2019, China has invested $60 billion in subsidies and incentives for EVs.India released a two-pronged strategy aimed at both buyers and manufacturers, in which it offers $1.4 billion in subsidies to buyers.
The subsidy for EV customers is RMB 60,000 (₹6,40,000) for battery electric vehicles (BEV) and RMB 50,000 (₹533,000) for plug-in hybrid vehicles (PHEV).India offers a purchase subsidy of ₹10,000 per kilowatt to which CEO's want to be extended to ₹15,000 per kilowatt.
China has over 1.2 million charging points as of 2019 and it plans to add another 600,000 charging pointsCharging infrastructure in India is at a nascent stage
China extended a 10% purchase tax exemption on EV sales until 2022.Indian government also lowered the GST rate on electric vehicles to 5% from the previous high of 12%

Whether it is foreign car makers like Tesla or the homegrown Tata, selling EVs in India may be an uphill task for a while.

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