According to reports, BluSmart’s current backers, which include BP Ventures and ResponsAbility Investments, intend to provide $30 million (INR 253.64 Cr) to help the electric taxi hailing business get back on its feet.
According to media reports, the money will be in the form of unsecured debt and will assist the business in covering its operating commitments, such as outstanding debts and employee salaries. According to the article, the investment proposal is contingent upon the resignation of co-founder Anmol Singh Jaggi.
Why Brand Shut Down its Operations?
After Gensol Engineering was accused of document falsification, share price manipulation, and embezzlement for personal indulgences by its promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, SEBI issued an interim order, which caused the ride-hailing startup to halt operations.
As a result, 10,000 of its drivers lost their jobs. Earlier this month, over 80 of these drivers gathered at Delhi’s Jantar Mantar to express their displeasure and call for government action.
The predicament of BluSmart demonstrates the disastrous effects of governance problems in businesses that need a significant amount of operating money. About 2.5 billion Indian rupees (about $30 million) are still owed to the company, and 8,700 electric cars are left unattended, putting their batteries and other parts at risk of deterioration.
In the Indian startup scene, where businesses frequently put expansion ahead of accountability frameworks, this pattern of governance issues impacting funding and operations is typical. Effective governance is crucial for preserving investor trust, according to research, especially in industries like electric mobility that need constant capital infusion.
Many companies still find it difficult to put strong structures in place early in their lives, despite the 2013 Companies Act’s introduction of provisions to boost governance.
Despite having previously secured a sizable investment, BluSmart’s situation illustrates how governance failures can swiftly lead to operational breakdown, with employees going underpaid and services suspended.
Roadblocks of India’s EV Taxi Market
Data indicates that, notwithstanding BluSmart’s issues, electric taxis have strong operational benefits, with energy costs of INR 0.82/km as opposed to INR 6.50/km for diesel vehicles. These economics contribute to the explanation of the significant future potential of the worldwide EV taxi business, which is expected to increase from $24.59 billion in 2024 to $80.77 billion by 2034.
The problem at BluSmart, however, highlights the extremely narrow operating margins and intricate infrastructure requirements that make EV fleet operations especially susceptible to interruption. BluSmart’s fleet of 8,700 abandoned cars shows how much of its valuable assets are in danger when operations stop, leading to a series of issues that go beyond a simple outage.
For EV fleets to succeed, dedicated charging infrastructure is still necessary. Inadequate infrastructure can lead to operational bottlenecks that can swiftly turn into major failure spots. Indian ride-hailing businesses face significant obstacles as they compete in a market worth $13.4–15 billion, which is still controlled by established players like Ola and Uber.
VinFast, the electric vehicle maker from Vietnam often likened to Tesla, is reshaping its worldwide strategy and focusing much of its energy back in Asia. After a bold push to enter the U.S. market, the company is now toning down its western ambitions and is realigning its expansion with much slower revenue growth than projected in the U.S. and with some big regulatory hurdles in the way.
VinFast’s founder and chairman, Pham Nhat Vuong, told shareholders of his parent company, Vingroup, that VinFast will shift its attention to operations in India, Indonesia, and the Philippines.
India Plant Set for June Launch
By the end of June 2025, the company plans to inaugurate a facility in India for special vehicle assembly. The plant will initially take on a very local mission, converting “knockdown” kits, basically, an automobile’s guts and other essential components, into complete vehicles that meet India’s right-hand-drive specifications. The company’s assembly plant will have space and infrastructure for up to 150,000 assembled and finished vehicles to leave its doors each year. VinFast’s ambition is to be the first Vietnamese automobile manufacturer to compete in the Indian market. This effort is being aided by the Tamil Nadu state government which has opened its doors for VinFast.
Challenges in the U.S. Prompt Shift
VinFast had invested heavily in its push into the U.S. market, but surging logistics costs and extended delays have forced a recalibration. Not only are U.S. tariffs on imports of electric vehicles a big unknown, but the company now knows it must find a way to close the gap between what it spends to deliver electric vehicles to North America and Europe and what its rivals spend. Remarkably, the company has decided to retreat, not permanently, the chief executive insists, but for the time being, because the figures just don’t work.
Tesla Hesitant, VinFast Moves Ahead
Whereas VinFast speeds up its operations in India, Tesla proceeds with caution. The Elon Musk-led electric vehicle (EV) giant continues to see India as an attractive opportunity but finds that steep duties make the market less accessible. Tesla’s chief financial officer, Vaibhav Taneja, recently underscored the point that the company continues to weigh the right time for an Indian debut. Till the time India doesn’t revise its policy of taxing imported vehicles, a full push by Tesla can’t be called certain.
Determined to establish itself in the emergent Asian car markets, VinFast is trying to gain a foothold there, even though it is not yet profitable. With operations in Indonesia on the verge of starting in October, the company looks to start dominating the regional markets while its American rival plays the waiting game for more favorable conditions.
With India’s expanding population and steadfast commitment to sustainability, Tesla, a prominent global player in the electric vehicle industry, perceives a promising opportunity for growth.
India’s intensified efforts to reduce carbon emissions and promote clean energy have led to a concerted focus on attracting foreign investments, particularly in the electric vehicle sector.
In a significant development, India has recently approved a scheme aimed at positioning the country as a leading manufacturing hub for cutting-edge electric vehicles. This strategic policy shift is designed to entice major players like Tesla to invest in India’s thriving electric vehicle (EV) market.
With these favorable policy reforms in effect, US-based Tesla is preparing to establish its presence in India. The government’s persistent advocacy for electric mobility, combined with the escalating demand for EVs, renders India an exceptionally appealing prospect for Tesla’s entry.
Tesla, Inc. is a prominent American multinational corporation based in Austin, Texas. The company specializes in the design, production, and distribution of electric vehicles, as well as a range of clean energy products.
After years of anticipation, a team from Tesla is finally making its way to India this month.
According to reports, Elon Musk, CEO of Tesla and SpaceX, is set to visit India during the week starting April 22, marking a significant milestone in the company’s growth strategy.
Musk is scheduled to meet with Prime Minister Narendra Modi and potentially unveil the company’s investment strategies in the country, as per reports.
Last June, during Prime Minister Modi’s visit to the US, Musk met the PM and disclosed his intention to visit India in 2024. He expressed confidence that Tesla would soon venture into the Indian market.
The team will be scouting potential sites for a car manufacturing plant, carefully considering the states of Telangana, Gujarat, Maharashtra, and Tamil Nadu as potential locations.
An email query sent to Tesla to confirm Musk’s visit and the company’s India investment plans remained unanswered.
The site selection process is of paramount importance, as it will determine the efficiency and productivity of Tesla’s operations in India.
India is now the most populous country in the world, based on population. India should have electric cars just like every other country has electric cars. It’s a natural progression to provide Tesla electric vehicles in India, Musk had said in a X Spaces session with Nicolai Tangen, the Chief Executive Officer at Norges Bank Investment Management.
Factors such as infrastructure, availability of skilled labor, proximity to suppliers, and logistical advantages will play a significant role in the decision-making process. Tesla’s meticulous approach to site selection ensures that the chosen location will support its commitment to innovation and sustainability.
Potential Economic Impact of Tesla’s Manufacturing Plant
Tesla’s potential investment of USD 2-3 billion in establishing a manufacturing plant in India speaks volumes about the company’s confidence in the Indian market.
Apart from creating job opportunities, this investment will have a profound economic impact on the chosen state. The establishment of a Tesla manufacturing plant will attract further investments, boost local businesses, and contribute to the overall growth of the region.
“I want investment to come in India because in India, it doesn’t matter who has invested money, (but) the sweat put into the work must be of our own people. The product should have the essence of our soil, so that our youth in the country will get employment opportunities,” said PM Modi in an interview to ANI, to a query on Elon Musk’s Tesla and Starlink’s possible entry into India.
Additionally, the presence of Tesla in India will lead to the development of a robust EV ecosystem. This will foster innovation, encourage the growth of related industries, and position India as a global player in the electric vehicle manufacturing sector. The economic benefits of Tesla’s investment extend beyond the company itself, creating a ripple effect that will positively impact the nation’s economy.
Excitement Among Tesla Fans in India
Tesla’s entry into the Indian market has been a long-awaited moment for EV enthusiasts and fans across the country. The news of Tesla’s visit and its exploration of potential manufacturing sites has sparked excitement and anticipation among the Indian population.
The promise of owning a Tesla electric vehicle, known for its cutting-edge technology and sleek design, has fueled the enthusiasm of fans who have eagerly awaited the company’s arrival.
Social media platforms have been abuzz with discussions and speculations about Tesla’s future in India. Fans have been actively sharing their excitement, expressing their desire to be a part of the Tesla community, and eagerly awaiting the official launch of Tesla’s operations in the country.
Tesla’s presence in India will bring forth a multitude of benefits for both the company and the nation.
Firstly, it will provide Indian consumers with access to Tesla’s advanced electric vehicles, renowned for their performance, range, and cutting-edge technology. This will contribute to the acceleration of electric vehicle adoption in the country, reducing dependence on fossil fuels and lowering carbon emissions.
Moreover, Tesla’s manufacturing plant in India will create job opportunities for the local workforce. The employment generated by the plant will not only benefit the individuals directly employed by Tesla but also support ancillary industries, thereby boosting the overall employment scenario in the region.
Additionally, Tesla’s entry will attract global attention and investment in India’s EV sector. It will encourage other international players to explore opportunities in the Indian market, fostering healthy competition and contributing to the growth and development of the electric vehicle industry as a whole.
This (E-vehicle policy) will provide Indian consumers with access to latest technology, boost the Make in India initiative, strengthen the EV ecosystem by promoting healthy competition among EV players leading to high volume of production, economies of scale, lower cost of production, reduce imports of crude oil, lower trade deficit, reduce air pollution, particularly in cities, and will have a positive impact on health and environment,”a government press release said.
The EV policy mandates a minimum investment of Rs 4,150 crore (∼USD 500 million), with no maximum limit. Manufacturers must establish manufacturing facilities within 3 years, commence commercial production of e-vehicles, and achieve 50% domestic value addition (DVA) within 5 years. Localization levels of 25% by the 3rd year and 50% by the 5th year are required. A 15% customs duty applies to vehicles with a minimum CIF (Cost, Insurance, and Freight) value of USD 35,000 for 5 years, contingent upon setting up manufacturing in India within 3 years. A bank guarantee is required to support the investment commitment.
Challenges and Potential Hurdles for Tesla’s Expansion
While Tesla’s entry into the Indian market holds immense promise, there are certain challenges and potential hurdles that the company may face during its expansion.
One significant challenge is the establishment of a robust charging infrastructure across the country. To support the widespread adoption of electric vehicles, a dense network of charging stations is essential. Tesla will need to collaborate with the government and other stakeholders to ensure the availability of reliable and accessible charging infrastructure.
Electric Vehicle per Charging Station in India as of January 2023, by Leading State
EV charging stations supply in India will surge as the Indian Oil Corporation (IOC) and two other public sector oil firms have pledged to install 22,000 charging stations by 2026. The National Highways Authority of India (NHAI) has also announced plans to target having EV charging stations every 40 – 60 miles along the country’s highways. India has an active network of 934 active public charging stations.
You can find the nearest EV charging station from your current location at:
Another potential hurdle for Tesla is the competitive landscape in India’s automotive market. Several domestic and international players have already established their presence, offering electric vehicles at various price points.
Tesla will need to differentiate itself and position its products strategically to capture a significant market share.
Furthermore, regulatory frameworks, import duties, and taxation policies may impact Tesla’s pricing and affordability in the Indian market. The company will need to navigate these complexities effectively to make its electric vehicles accessible to a wider range of Indian consumers.
Government Aid and Incentives for EV Manufacturers
The Indian government has been actively promoting electric mobility through various initiatives and incentives.
In line with the country’s commitment to sustainable development, the government has introduced favorable policies and frameworks to encourage the adoption of electric vehicles.
Under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, the government provides financial incentives to both manufacturers and buyers of electric vehicles. These incentives aim to reduce the upfront cost of EVs, making them more affordable and attractive to consumers. Tesla can leverage these incentives to make its electric vehicles more accessible to Indian buyers.
Additionally, the government has set ambitious targets for electric vehicle adoption, with a goal to have only electric vehicles on Indian roads by 2030.
This commitment sends a clear signal of support to EV manufacturers, including Tesla, and creates an environment conducive to their growth and success in the Indian market.
Competitors and the Electric Vehicle Market in India
Tesla will be entering a competitive landscape in the Indian electric vehicle market. Several domestic and international players have already established their presence and are actively catering to the growing demand for electric vehicles.
Mahindra Electric, the electric vehicle division of Mahindra & Mahindra, is one of the leading domestic players in the Indian market. The company offers a range of electric vehicles, including cars and commercial vehicles, and has established a strong network of dealerships and service centers across the country.
Players such as Hyundai, Tata Motors, and MG Motor have also made significant strides in the Indian electric vehicle market. These companies have introduced electric vehicles with competitive pricing, attractive features, and extensive service networks, catering to the diverse needs of Indian consumers.
Tata Punch EV, MG Comet EV, and Tata Nexon EV are among the top three popular electric cars in India.
Tesla’s entry into the Indian market will bring a fresh perspective and introduce its iconic brand to the Indian population. The competition will encourage innovation, drive technological advancements, and ultimately benefit consumers by offering a wider range of electric vehicle options.
Conclusion – The Future of Tesla and Its Impact
Tesla’s long-awaited entry into the Indian market holds immense promise for the future of sustainable transportation in the country. With its advanced technology, sleek design, and commitment to reducing carbon emissions, Tesla’s electric vehicles are expected to find a receptive market in India.
The establishment of a manufacturing plant in India will not only create job opportunities and boost the economy but also contribute to the growth and development of the Indian electric vehicle industry. Tesla’s presence will catalyze the adoption of electric vehicles, encourage competition, and drive innovation in the sector.
As Tesla’s team visits India to explore potential manufacturing sites, the expectations and excitement among fans and enthusiasts are at an all-time high. The Indian government’s support, incentives, and commitment to electric mobility further solidify India’s position as a key market for Tesla.
With its unparalleled brand value, cutting-edge technology, and commitment to sustainability, Tesla is poised to make a significant impact on the Indian electric vehicle industry. The future looks bright as Tesla’s entry into India paves the way for a greener and more sustainable transportation landscape.
FAQs
What is Tesla?
Tesla is an American electric vehicle (EV) and clean energy company known for its electric cars, renewable energy products, and energy storage solutions.
How does Tesla approach innovation?
Tesla is known for its innovative approach to technology and design, constantly pushing the boundaries of electric vehicles and renewable energy technology to make sustainable solutions more accessible and appealing.
Why is Tesla interested in India?
India presents a significant opportunity for Tesla due to its growing population, increasing focus on sustainability, and government initiatives to promote electric mobility and renewable energy.
What recent developments indicate Tesla’s focus on India?
Tesla’s CEO Elon Musk has expressed interest in entering the Indian market, and the company is reportedly exploring opportunities for manufacturing and investment in the country.
Everyone is salivating at the electric vehicle market pie in India! If the recent spate of investments is anything to go by, the EV segment is touted to be among the leading hero sectors driving India’s growth. However, stakeholders seek clarity and concrete policy initiatives from the government to make further inroads into the segment.
“Several factors contribute to the increasing investments in India’s electric vehicle (EV) segment. India boasts the world’s largest untapped market, particularly in the two-wheeler sector, presenting an enticing investment opportunity. Growing demand, driven by a young and affluent population eager to embrace new technologies, further fuels investment interest,” said Arindam Lahiri, chief executive officer of the Automotive Skills Development Council.
The 2022–23 Economic Survey tabled in Parliament in December last year had pegged EV sales at 1 crore and 5 crore jobs in the sector by 2030. Leading think-tank, the Centre for Energy Finance, expects India’s EV market to be $206 billion by 2030.
There is no denying that demand for EVs has been on the rise. According to the Ministry of Road Transport and Highways, electric vehicle purchases spiked by 51% year over year to 740,000 in April–September. This number is expected to cross a record of 1.5 million during the entire fiscal year.
StartupTalky takes a closer look at this demand, the reasons behind the rise in investments, and the roadblocks that need to be addressed.
Earlier this week, electric vehicle and appliance manufacturer–Wardwizard Innovations & Mobility said it would invest ₹2,000 crore for the development of an electric vehicle ancillary cluster in Gujarat. Other states are not too far behind. Karnataka is said to have received investments worth ₹25,000 crore so far in the EV and ancillary space, newspaper reports quoted a state minister as saying.
Earlier this year, British energy giant BP invested in EV delivery company Magenta and BluSmart Mobility, an EV-only ride-hailing company. Last year, global energy giant Shell backed the fund-raising exercise of Gurugram-based EV charging network company Statiq.
One of the reasons for this frenetic activity in the EV segment is because of the huge potential that India holds. S&P Global Ratings has pegged India’s EV penetration at 1.1%, a far cry from the 17.3% average in Asian countries.
Despite the investments in the EV and clean technology sectors, there is still a long way to go for demand to remain persistent, say venture capitalists and companies that StartupTalky spoke with. According to them, some key areas that need to be addressed in the EV segment include:
Charging Infrastructure
According to a report released by the Confederation of Indian Industries in June this year, India may need 1.32 million charging stations by 2030 to meet the government’s ambitious sustainability targets. As of January 2023, there were 5,254 charging stations in the country, as per data disclosed in the Lok Sabha by Union Minister RK Singh.
“India’s growing EV market penetration and battery development ambitions also introduce new barriers, including supply-chain worries related to the price and availability of semiconductors, metals and minerals, and battery cells, as well as concerns about insufficient charging infrastructure and electricity grid readiness,” a report by the International Institute of Sustainable Development said in August 2022.
Some state governments, such as Uttar Pradesh, have already started work on installing charging stations along five main express highways in the state.
Empowering Local Manufacturing & Research
Apart from improving infrastructure, incentives also need to be provided to component manufacturers and for R&D (research and development), analysts and corporations.
“In the last five to six years, funds have been going into battery manufacturing and battery technology companies, but that money is not there for the kind of R&D we need. It is slowly coming in. But the frugality with which Indians work is what we must leverage,” said Rohan Shravan, founding CEO of Tresa Motors, pointing to the higher cost of manufacturing.
Imported lithium batteries in EVs constitute around 50–60% of the cost of EVs, making them much costlier.
“The indigenous availability of the vehicles’ batteries and spare parts will also impact the consumer mindset and also the manufacturer’s mindset, as it will make it even cheaper for us to manufacture and sell,” said Kanchi Patel, director and co-founder of two-wheeler electric bike manufacturer Abzo Motors.
Co-founder of angel investing firm The Startup Capital–Aditya S. Kapur, however, feels looking out for newer innovative technology and incubating these ideas at home is far more important than just manufacturing.
“Our main concern is not to run our car on electricity. Our real problem statement is that we want a non-polluting automobile. We cannot call a car running on electricity completely clean. The whole process of innovation is completely linked to exploring. We need to give time to the stakeholders and allow them to explore things,” Kapur said.
Policy Push
Companies and investors are now looking to the government for easier policy regulations.
In 2015 and subsequently, in 2019, the government launched the Fast Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India. Under this initiative, buyers of EVs were incentivized by an upfront reduction in costs. However, owing to reports of malpractice, the government tweaked this initiative and reduced these incentives.
At present, the Department for Promotion of Industry and Internal Trade (DPIIT) is said to be working on a scheme to extend subsidiaries to electric four-wheeler makers based on the investments they make to manufacture locally, The Economic Times reported earlier this week.
Many stakeholders are also wary of putting their fingers into the EV pie as they are waiting for more concrete steps from the government.
“Till infrastructure is in place, heavy vehicles or large commercial vehicles are only bidding time, said Manas Pal, co-founder of Pedal Start, a Gurugram-based accelerator. He added, “The supporting component of this sector will play a very important role. Something on the charging stations, something on the battery development side, something on the battery manufacturing side, something on the battery recycling side, something on providing doles to people buying these commercial vehicles, something on the loan side will impact a lot,” Pal said.
Conclusion
The road to a pollution-free commute may seem like a long one, but at least the right noises have been initiated by stakeholders, including the government and investors. It, however, remains to be seen if India manages to hit a sweet spot in the EV sector. For now, this can be possible only with a concrete roadmap from the government, persistent corporate investments, and an ingenious sustainability model from think tanks.
