Ahead of Tesla’s entry, India’s EV makers slash prices to boost demand in world’s third-largest automobiles market

The move comes just as Tesla is expected to enter India, with speculation that the US carmaker will launch a low-cost car in the world’s third-largest vehicle market

EVs currently account for around 5 per cent of India’s automobile market, but that figure is projected to grow to 40 per cent by 2030

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An electric vehicle is driven in New Delhi. EVs currently account for around five per cent of India’s automobile market. Photo: Reuters

Published: 4:00pm, 24 Feb 2024Updated: 5:50pm, 26 Feb 2024

Two of India’s leading EV makers, Tata Motors and Ola Electric, announced that they were cutting the prices of their vehicles this month, shaking up a niche segment in the world’s third-largest market for automobiles and igniting the promise of record-breaking growth.

The move comes as Indian market participants await Tesla’s entry, with speculation the US carmaker will launch a low-cost car in a country where consumers are particularly price sensitive.

Tesla last year embarked on price cuts amid sliding battery prices – the most important component of EVs – and inventory overhang. If the industry pioneer succeeds in India, it could well provide a new growth template globally, analysts say.

Workers inspect Tata Nexon electric SUVs at a Tata Motors plant in Pune. Tata accounts for around 70 per cent of EVs in India. Photo: Reuters

EVs currently account for around 5 per cent of India’s automobile market, but that figure is projected to grow to 40 per cent by 2030, at which point EV revenues will reach US$100 billion annually, according to a report by US consultancy giant Bain & Co published in December.

Electric car penetration, which trails two- and three-wheelers, is likely to hit about 15-20 per cent, says Mihir Sampat, a Mumbai-based partner at Bain & Co.

Unlike other markets where EV sales have slowed, India’s appears poised to take off.

“India is late in terms of penetration levels [of EVs], but now we can say that the ball has started rolling,” said Puneet Gupta, director of mobility at S&P Global.

India has expanded a production-linked incentive (PLI) programme for the manufacture of EVs, which includes tax breaks, cheaper rentals and discounted electricity charges that are tied to production volume and greater localisation.