India’s new policy for electric vehicles, aimed at inviting the likes of Tesla to start manufacturing in India, ensures that the king of Indian EVs and the king of American EVs drive in separate lanes but Tata Motors and Tesla may race against each other in the luxury car segment.

Posing competition risk to a few of the upcoming models of M&M and Tata Motors at the upper end of the SUV market, the policy allows 8,000 units of electric vehicles above $35,000 (Rs 29 lakh) to be imported annually at lower duty of 15% vs 70-100% currently for 5 years against an investment of $500 million for local manufacturing.

The import of EVs below $35,000 would continue to attract import duty in excess of 70%, thereby protecting Indian OEMs operating in that price point.

“The government’s emphasis and ambitious plans on the EV front would attract global EV players like Tesla, which would surely invite competition for the likes of market leader Tata Motors in the premium EV space. TaMo has big plans to electrify its existing premium models and bring in new EV models in the premium space. However, the global EV leader Tesla can spoil their party considering their experience, expertise and EV know-how and scale of operations,” Ashwin Patil, Senior Research Analyst at LKP Securities, told ET Markets.

Estimates done by Nomura show that Tesla’s starting on-road price in India for Model 3 (RWD) could be around Rs 51 lakh and go up to Rs 1.2 crore for Model S Plaid.

At these price points, Tesla will largely compete with luxury car OEMs in India as it does globally. “We believe since the volumes will be limited to 8k units, Tesla may want to focus on promoting higher-end models to take maximum advantage of duty benefits,” Nomura’s auto analysts Kapil Singh and Siddhartha Bera said.Considering that India sold 42,000 luxury cars in 2023, the plan to import a maximum of 8,000 premium EVs per annum at a concessional rate will lead to a market penetration of about 20%.Homegrown Tata Motors dominates India’s EV market with its Tiago, Nexon, Tigor and Punch models, followed by MG Motor India, and Mahindra & Mahindra.

M&M plans to launch five all-electric SUVs in India based on its new, purpose-built electric platform, INGLO, starting in December 2024.

“With incentives like a 5% GST rate and road tax exemptions, EV penetration in the luxury segment reached 4% in 2023. Tata Motors leads India’s EV market with a 72% share, while Tesla dominates the US market with 55%, but Tata Motors prioritizes segment growth over market share dominance,” said Dr Nishant Srivastava, CEO, Torus Private Wealth.

Tatas control over 70% of EV market in India

Tata Motors, with a more than 70% share of the EV market, plans to expand its portfolio in the category by rolling out the Harrier EV and Curvv EV models over the next few months. EVs already account for 14-15% of the company’s sales, which it aims to increase to 25% by 2027 and 50% by the end of the decade.

Also read | Tata Motors to demerge business into 2 listed entities

Tatas had recently reduced the prices of Nexon by up to Rs. 1.2 Lakh. Tiago’s base model now starts at Rs 7.99 Lakh following a price cut of up to Rs 70,000.

Nomura analysts Indian OEMs have built strong competencies over the years and have demonstrated market share gains across segments vs global competition.

“One of the reasons for their success has been their ability to understand consumer trends and adapt faster with lower development costs. They have also shown more commitment to electrification in India in their model cycles than the global OEMs, so far,” it said.

Analysts believe that every player has a chance to establish itself in the fast-growing and attractive EV domestic market, which means that the market share loss of TaMo should be limited.

EV penetration in India remains low (2.3% of all passenger vehicles sold) due to consumer concerns over affordability, range anxiety and inadequate charging infrastructure.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)


Source link