The entry of Tesla and Fisker into the Indian electric vehicle (EV) market is a significant development, highlighting the growing global interest in India’s burgeoning EV industry.
Fisker Inc. plans to begin selling its Ocean electric sport-utility vehicle (SUV) in India from July 2023. The company, led by CEO Henrik Fisker, also aims to start local manufacturing in India within a few years. Fisker believes that EV sales in India could accelerate by 2025-2026. However, importing the Ocean, priced at $37,500 in the U.S., to India could be costly due to logistics and a 100% import tax. Fisker’s rival, Tesla Inc., has also expressed interest in the Indian market but has put its plans on hold because of the high import tax. Fisker’s contract manufacturing partner, Magna International, will produce the Ocean at its Austrian unit and ship it to India. Fisker’s entry into the Indian market indicates a strategic move to be among the first in a market that is expected to eventually fully transition to electric vehicles.
On the other hand, Tesla is ready to invest up to $2 billion to set up a factory in India, contingent on the Indian government reducing the import duty on its vehicles to 15% for the first two years of operations. India is considering a new EV policy to lower import taxes to as low as 15% in exchange for commitments to local manufacturing. Tesla’s investment could range from $500 million for 12,000 vehicles to $2 billion for 30,000 vehicles, depending on the government’s approval of reduced duties. The Indian government is evaluating Tesla’s proposal but aims to reduce the number of cars imported at a lower duty.
The Indian domestic EV market itself is experiencing significant growth. In 2021, the market size was USD 1.45 billion and is projected to grow to USD 113.99 billion by 2029, with a CAGR of 66.52% during the 2022-2029 period. In 2020, the industry saw an 11.34% increase compared to 2019. By 2023, the market is estimated to be valued at $5.61 billion, expected to reach $37.70 billion by 2028, growing at a CAGR of 46.38%. The automotive industry, of which the EV sector is a part, contributes significantly to India’s economy, accounting for around 8% of all national exports and a large portion of global research and development spend. By 2030, the Indian EV market is expected to reach $150 billion, growing at a CAGR of 90%. These numbers indicate a robust and rapidly expanding domestic market, driven by government incentives and increasing adoption of EVs.
In conclusion, the interest of global EV giants like Tesla and Fisker in the Indian market, combined with the rapid growth of the domestic EV sector, suggests a dynamic and potentially lucrative future for electric vehicles in India. The government’s policies and incentives will play a crucial role in shaping this future.