Tesla is opening its first India showroom as the EV maker looks towards new markets to offset slowing sales in regions where it's already well established.
Bloomberg's India Auto Reporter, Alisha Sachdev explains the significance of the move.

Mumbai

Tesla has opened its first showroom in India, following years of negotiations with the Indian government over high import tariffs. The company is starting its entry with two experience centers, one in Mumbai and another in New Delhi, to gauge market demand before considering further investment.

This initial approach involves importing vehicles rather than local manufacturing, which falls short of the Indian government's hopes for domestic production. Key challenges for Tesla include high import tariffs affecting pricing, ongoing policy discussions, and the question of whether this entry will eventually lead to manufacturing in India.

Tesla makes long-awaited India debut

Alisha, talk to us about how significant this move is. Well, good morning, Hassan. It is a significant move in that after years of back and forth and stop start negotiations with the Indian government over its high and steep tariffs on car imports, Tesla has finally decided to enter the Indian market. But for PM Modi, who has made local manufacturing the cornerstone of the Indian industrial push, this is not a very satisfying move, given that Tesla is only going to make a bit of a cautious start, a soft landing, if you will, by importing cars into the into the Indian market to really test the waters first. What we're seeing is Tesla launching with two experience centers, one here in Mumbai in the financial capital and one in New Delhi, which is set to open up later this month. So it is significant because I mean, it is a milestone, of course, because it is the world's most valuable EV company. India is, although a complex market, too big to ignore. It is the third largest car market in the world. So Tesla has decided to dip its toes. It's not the kind of full fledged manufacturing push that India was hoping for, but it will allow the brand to really gauge demand for the market for its cars with the country's affluent buyers. Wait, a debut yet has been pretty low key. How do you explain the approach that Tesla is taking to a huge market like India? No, absolutely, it is low key, especially considering how the other global car makers have approached the Indian market. So we're not really seeing a PR or a media blitz around this launch. There's no Bollywood celebrity cutting a ribbon here. And it is a very Tesla like play. Clearly, it is banking on the organic brand full that the brand, you know, has in other global markets to really do the work in India as well. The best way to look at these experience centers will be as kind of live market experiments. Tesla is about to find out how many people walk into these stores, the kind of buzz that the brand is able to generate, and then how that buzz really translates to people wanting to pony up the cash and pay a very steep premium for the car. Big questions being asked right now, what are the key ones for for Tesla? There are three big questions that Tesla will have to address in India. The first one and the one to immediately address is around pricing with 70% import tariffs on Tesla's cars. They will fall in an entirely different direction. The first one is about pricing. So if you look at the price of the car, you can see that the price of the car they will fall in an entirely different price bracket than the Tesla cars do in the US and Europe. So one will have to see whether even the luxury car buyers will want to pay these steep premiums for a Tesla badge in India. The second one is really the policy angle. For years, Tesla has tried to negotiate and impress upon India that it is its car market is highly protected and particularly for EVs, which is a cleaner emissions technology. There should be concessions given to new players wanting to access the market and gauge demand for their products. India is also currently discussing trade terms with the US and European Union. So if a favorable framework comes up there, then that may change Tesla's plans. And the biggest one, of course, is whether all of this will lead to manufacturing in India. And that's something we have to watch for.

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