With global sales slumping, Tesla tries to break into a new market
Tesla, which is facing slumping sales and complications from CEO Elon Musk's political entanglements, opened its first showroom in Mumbai on Tuesday. The company needs to boost its sales, and pushing into a new market with untapped buyers could help.
The Tesla web site shows the price of a Model Y at 61,07,190 rupees, or about $71,000. However, the same car is listed on the company's site for US buyers at about $45,000 before applying a $7,500 federal tax credit for electric vehicles (EV), which would lower the cost to $37,500. (That tax credit is due to expire at the end of September.)
Tesla has had a long-stated desire to sell in India, but Indian tariffs on foreign autos, which can more than double the cost of a vehicle there, have been the barrier, according to the World Trade Organization and Tesla executives.
'We've been working on getting into India. India is a very hot market,' said Tesla CFO Vaibhav Taneja in a call with investors in April. 'It will be a great market to enter because India has a big middle class.'
But he said the tariffs 'create a little bit of tension, which we're trying to work around.'
India is the third largest market for auto sales behind China and the United States. The absence in India has hurt Tesla's global sales, which are suffering the largest sales decline in the company's history in the face of increased competition, and a backlash in some markets to CEO Elon Musk's political activities.
Nearly half of Tesla's sales revenue comes from the United States, while just over 20% comes from China. The other 30% comes from other countries.
The United States and India are involved in trade talks, and President Donald Trump announced two months ago that India had offered to eliminate tariffs on US imports as part of a deal to avoid the administration placing steep tariffs on all Indian exports to the United States. But Indian officials said at that time that there was no preliminary deal in place.
Tesla is not only losing sales to legacy automakers that have increased their EV offerings, but it faces growing competition from Chinese EV makers. In fact, Tesla is poised to lose its title of the world's largest EV maker to Chinese automaker BYD, even though BYD is not able to sell in United States.
The company has been losing some of its sales executives, with the Wall Street Journal reporting Tuesday that Troy Jones, Tesla's vice president of sales and service, has left the company. The report was attributed to people familiar with the matter. Tesla did not respond to a request for comment.
Tesla executives have spoken of a desire to build a plant in India, but at the moment its existing plants in the United States, China and Germany have more capacity than there is demand for its vehicles. Its plans for another plant in Mexico are currently on hold.
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