Tesla CEO Elon Musk may likely announce the entry of his autonomous EV-making company into India after he meets Indian Prime Minister Narendra Modi later this month.
Reportedly, the company chasing Level 5 autonomous driving is also scouting locations in New Delhi and Mumbai to open its first few physical stores in the country.
We could soon have luxury Tesla EVs stuck in Mumbai or Bengaluru’s infamous traffic jams. However, Tesla is not the only foreign EV company making a foray into the Indian market.
Earlier this year, Chinese electric vehicle manufacturer BYD entered the Indian market, boldly stating its intention to seize 90% of the nation’s EV market.
Surprisingly, BYD, a company few people have heard of outside China, surpassed Tesla in sales volume during the final quarter of 2023. For context, BYD experienced a 73% sales surge in 2023, selling 1.6 million units, trailing Tesla’s 1.8 million units.
Although Tesla maintains its lead in annual sales figures for 2023, there’s a strong possibility that BYD could soon overtake Tesla in terms of overall sales.
Chinese Cars on Indian Streets
Last month, BYD, which has achieved Level 3 autonomy, introduced the Seal electric vehicle in India, priced between INR 40 to 55 lakh. Within a few hours of the launch, the vehicle garnered over 200 bookings.
While it’s still unclear how Tesla will price its models, their most affordable car is expected to fall in the same price bracket. Prices can escalate to INR 2 crore for higher-end models like the Tesla Model X.
We’ll have to wait and see if Tesla adopts a competitive pricing strategy in India to compete with BYD and other EV manufacturers, including market leader Tata Motors.
However, BYD will undoubtedly introduce affordable cars in the Indian market. For instance, the BYD Seagull EV Honor Edition starts at USD 9,700, or approximately INR 8-9 lakh, excluding taxes. In the coming years, BYD will bring its cheaper cars to India, targeting middle-class Indians.
Notably, the mid-range price segment is the most lucrative for automobile makers, accounting for over 40% of the market, and BYD has already made its intentions clear about targeting this segment.
This could mean the average Indian car may be a Chinese car in the coming years.
Moreover, BYD’s entry into India could open the doors to hundreds of Chinese EV companies. According to Wired, nearly 300 EV companies operated in China last year.
This could mean that China-made EVs might flood the Indian market in the coming years, similar to Chinese smartphones, which seem to be ubiquitous in the hands of every other Indian.
Interestingly, phone maker Xiaomi has also begun selling its EV in the Chinese market this year.
Meanwhile, the government is not planning to put any restrictions on the import of EVs to India, even from China. While there is a limit to the number of vehicles imported from a foreign country, there are workarounds.
BYD, for instance, is seeking a homologation certification from the Automotive Research Association of India (ARAI) for its vehicles, allowing it to bypass the import restrictions.
Selling AI Cars
While autonomous vehicles on Indian streets still remain a distant dream, automobile makers are increasingly introducing AI-powered features such as smart parking, advanced driver-assistance systems (ADAS) and battery management systems.
Earlier this year, BYD introduced an AI-powered smart car system powered by Drive Thor, NVIDIA’s next-generation in-vehicle computing chip. The second-largest EV maker in the world unveiled the XUANJI AI large model, marking the first integration of AI across all vehicular domains.
Other Chinese EV makers like Xpeng have also announced their plans to invest millions of dollars in AI. Many industry experts that AIM spoke to told us that AI features will play an important role when customers shop for cars.
Chinese EV companies can sell AI-powered cars at reasonable prices and gain significant market share not just in India but globally.
China’s dominance in EVs is worrying
China’s growing dominance in the global EV landscape has become a cause for concern for many in the western world. Former US President Donald Trump claimed, if re-elected, he would impose a 100% tariff on Chinese cars.
US Commerce Secretary Gina Raimondo claimed that modern cars are essentially iPhones on wheels. She expressed concerns that if Chinese-made cars operate on American roads, they could be susceptible to hacking, posing a potential threat to national security.
Investment bank UBS said in a report that BYD and other leading Chinese EV companies are set to conquer the world market with high-tech, low-cost EVs for the masses.
This could also hold true for India, posing a significant challenge for Indian homegrown companies such as Tata, Maruti and Mahindra, which are developing their own AI-powered EV models.
While India does not intend to restrict EV imports, its stance might change if Chinese EVs flood the Indian market. Earlier, the government banned many Chinese apps, including TikTok, citing national security threats.
Banning Chinese EVs under the guise of national security remains a possibility.
