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Tesla, Inc. (TSLA) Model 3 Could Skip India, But Elon Musk is No Idiot

Tesla Motors Inc (TSLA) Model 3 Source: Tesla
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Tesla, Inc. (NASDAQ:TSLA) has released its most inclusive vehicle yet. At an alluring $35,000, the Model 3 is practically a steal. That’s even truer for the developing world, which Elon Musk stays clear of as well as he can. There is one region the company has to take advantage of, though: Asia. And that includes places like India.

Actually, India is an ideal place to get into for Tesla, especially with the Model 3 now finding its legs. Its reduced price tag makes the car ideal for the predominantly low-income region. Factor in that India is the third biggest consumer of cars worldwide and has a government policy of flooding the country with electric cars, and you get Tesla’s next big buyer base.

The argument against the Asian subcontinent is its poor infrastructure. Putting it mildly, electricity is an unreliable resource for a majority of population there. Yet with the government so dedicated to curbing carbon emissions and a growing wealthy class, can Tesla afford to overlook India for much longer?

Tesla, Inc. can’t skip India

One report backing the instant popularity of Elon Musk’s auto business in India comes from Forbes. The country has an expanding luxury market. It would make the electric car giant extremely popular as soon as it enters. That wouldn’t leave out the country’s middle class either, since the company’s offerings just got a lot more affordable.

In the U.S., the Model 3 goes for about $35,000 at its most standard. That figure also doesn’t account for tax benefits, which can drop the price down to around $27,000. India has similar benefits for its population, too. Accounting for import duties and other varying costs, the company’s newest car could go for about $40,000 at its most standard. Still a fair offer.

Tesla has two other cars as well. They are the well-established Model S flagship and Model X SUV. Those have base prices of about $80,000, with better bells and whistles than their younger sibling. But it is the mass market car that will sell like hot cakes in the EV-hungry region. In fact, vehicle sales need to be 100 percent electric in thirteen years’ time.

Prime pickings for Tesla

This makes India a vital part of Musk’s ambition to revolutionize the car industry. The country is just short of begging Tesla to step in. And with regulations forcing out gas-powered cars, the Tesla is bound to gain support from local businesses. Right now, many businesses feel the pressure to make sustainable ties with automakers that will still be around post-2030.

Frankly, the country’s thirst for electric cars makes it prime pickings. Much of the EV giant’s focus revolves around Model 3 sales in the U.S., but India has promise, too.

Tesla Inc. climbed almost 2 percent in Tuesday’s pre-market session. TSLA looks ready to score more than that during market open. The company is up 58.11 percent as opposed the S&P’s 9.67 percent climb this year.

Musk is no idiot

All these incentives considered, Musk is no idiot. There are a host reasons the CEO can cite to validate his firm’s non-presence in India. Topping that list would be the country’s poor power delivery. For most Indians, electricity remains scarce. The nation is made up of 1.2 billion people. Of that number, 300 million of them have literally no access to power in their homes.

Those who do get access have to make due with spotty supplies of electricity. Whole municipalities can sees days with little to no supply. In short, the country has a spectacularly unreliable power grid — reason enough for an electric car manufacturer to stay clear of it.

India’s minister of Transportation and Highway paid Elon Musk a visit last year. He sought a partnership to help his government push its “pollution-free road transport” agenda. The Indian subcontinent makes no jokes about its low emission car craving. The government there is working tirelessly at not only luring electric car makers into the country, but shifting the motoring population to lower-emission vehicles.

India asks for a lot right now

The Indian government would much rather see Musk and his company building its cars there though. Part of its India-first policy inlcudes corporations building their products in the country. ThatI, or face massive import duties. The current government is very assertive when it comes to growing the economy. It seeks to create work and promote India as a global manufacturing superpower.

In a tweet from India’s ministry of commerce and industry, Musk was told that Tesla (NASDAQ:TSLA) is welcome to enter India, but only if it manufactures in the country as well. So, there is that to overcome, too.

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Mvusi Ngubane

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