India as a New Potential Market for Tesla Automobile Sales

Tesla has recently made groundbreaking strides in expanding its market portfolio key in improving its global reach. Yet, several frontiers remain uncharted, therefore, presenting an ultimate opportunity for the company to boost automobile sales. India currently represents an ideal market for base and new electric car models, which is why Tesla needs to ready itself to enter this emerging electric vehicle (EV) market within the next year. Capturing this market will also allow the company to establish a major subsidiary in South East Asia, before proceeding to establish Tesla manufacturing plants and showrooms across the entire region. The following is a summary of key findings from my evaluation of India as a new potential market for Tesla automobile sales.

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Key Findings

Demographics

            India will serve as an important pivot for Tesla’s automotive sales as a consequence of its ever-expanding population. According to the Word Population Review (2020), India remains the most populous country today; a position it is likely to retain given its low infant mortality rate and recent focus on a reinvigorated healthcare system.  The India population, therefore, represents a suitable electric vehicle (EV) market given its stability and solid foundation as a hub for innovation in South East Asia.

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Political Stability

            Today, India is among the last true pinnacles of democracy within the subcontinent in which it is situated. According to Hardgrave (2019), India enjoys relative political stability due to a strict adherence to democratic political ideals of leadership and the presence of competent leaders to support the executive, parliament, and judiciary within its national governing framework. This is further strengthened by recent efforts to adopt a unitary system of administration crucial in promoting inclusivity and a basic requirement when attempting to reinforce political stability. Such an environment is ideal for a leading automotive manufacturer such as Tesla given its dedication to creating new niches globally.  

Economy and Communications

            Over the past decade, India has registered considerable economic growth in the region and is currently cited among the fastest-growing markets globally further supported by an elaborate communications network. India’s promising economy is mainly attributed to the presence of a population of young professionals credited with improving its per capita and nominal income (Joshi & Kapur, 2014)Additionally, India’s animated economy provides an appropriate market for Tesla to make headway largely owing to its potential for growth coupled with the presence of a low dependency ratio. The presence of a clearly defined communication apparatus comprising of digital, postal, telegraphy, and broadcasting systems will greatly benefit Tesla in the dissemination of information to India’s burgeoning population. Apart from covering urban metropolitan regions, the aforementioned communication systems also cover rural and tribal areas; creating a dependable system for relaying information.

Education and Cultural Sensitivities

             Education and cultural heritage have long been known to take precedence in India. For instance, Tilak (2018) acknowledges that the federal government of India has taken the extraordinary step of emphasizing the importance of schooling through its decree of free and mandatory education for children between 6 and 14 years old.  This has resulted in India being one of the most educated nations in the region; characterized by a high rate of enrollment and a major focus on a first-rate education system. Considering such factors will greatly benefit Tesla when making key staffing decisions for its Indian subsidiary. Furthermore, India is known for its cultural diversity and sensitivities given it hosts over 2,000 ethnically distinct groups (Hardgrave, 2019). The scheduled caste system has typically cast a dark shadow on India. However, the country has made notable progress through affirmative action to end all forms of discrimination within its borders.  India is, largely, a tolerant country save for emerging global issues such as homosexuality; mainly considered incompatible with the values and sensitivities within its culture. Tesla must, therefore, remain aware of this fact when developing its plan for setting up a subsidiary to enter the Indian EV market to avert the possibility of grappling with challenges associated with embracing policies inconsistent and inconsiderate of cultural sensitivities.

Marketing Opportunity Proposal

            Tesla is currently faces an uphill task competing with established automotive manufacturers such as Toyota and Ford for the Indian market. However, the Tesla might benefit greatly by exploring new products and services to generate additional revenue for the organization to ultimately fuel growth. The following are three potential opportunities I would like to pursue India to generate growth for Tesla in India.

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In-house battery production. Tesla’s recent departure from its reliance on Panasonic for its battery production now presents a unique opportunity for the company to finally focus on in-house battery production as a potential business opportunity. India’s central location, between Asia and Europe, will make it possible for the company to supply electric car batteries to other electric vehicle makers, thus boosting its company and financial profile. As a major cost component, electric car battery will be in line with the company’s idea of vertical integration while cutting production costs associated with this complex process.

Less expensive base models for the Indian population. Tesla should also focus on customizing its production to suit India’s growing market. This should involve focusing on producing less expensive models for the population in this particular region of the world. As of 2019, the GDP of India stood at 2.869 trillion USD with 600 million of its inhabitants assigned a middle-class status (The World Bank, 2021.  A less expensive base model for the Indian population would, therefore, thrive among the wealthy, middle, and working class Indians, creating a new market for Tesla-manufactured automobiles.

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Setting up an auto-component plant. Tesla’s manufacturing capabilities can also be bolstered by establishing an auto-component subsidiary within India. According to Singh (2017), India is an economically-viable location for leading companies seeking to diversify their production capacities. Moreover, an auto-component plant will also be supported by the presence of industrial clusters that serve as a defining hallmark of India, especially given the ready availability of copper, steel, and rubber for production.

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