CLSA Feels Tesla's Entry Will Not Impact India's Electric Vehicle OEMs

As the buzz for Tesla’s entry grows in the Indian market, capital market and investment group CLSA feels that it will not anticipate significant threat to Indian auto original equipment manufacturers (OEMs). As per CLSA, even if Tesla launches a BEV at $25,000, its features and specifications would be meaningfully compromised compared to its traditional models.

Currently, the Tesla Model 3 and Model Y are the most affordable, priced around $35,000 at an ex-factory level in the US. Thus, Tesla needs to either sell the same models with reduced features to lower the cost for the Indian market or incur losses.

As per CLSA even if one assumes that the import duty is revised to around 15-20%, the price would be significantly higher than most of the 4 meters long electric SUVs. Hence, they won’t be able to compete with current electric SUV makers in India like Tata Motors, Mahindra and Mahindra, Maruti Suzuki India and Hyundai Motor India.

Interestingly, stock prices of Indian auto OEMs have fallen in the past two weeks since the buzz around Tesla’s entry gained ground. CLSA said that the reason behind Mahindra and Mahindra decline in stock price by 16.5% is due to their recent de-rating.