How do you slap yourself? China says Tesla will struggle in India, country is not ready BEVs, while BYD and MG are trying to expand there

China’s Global Times, a newspaper owned by the Chinese Communist Party’s main newspaper People’s Daily, recently published an op-ed that says Tesla’s intention to invest in India will struggle to succeed because of the South Asian country’s poor charging infrastructure, adding that its weak supplier base cannot support Tesla cars.

Since the article was published by a government-owned newspaper, the article is a reflection of China’s opinion on Tesla’s attempt to forge closer ties with India, a country that is in conflict with China.

Last Thursday, Elon Musk posted on X “Looking forward to meeting Prime Minister Narendra Modi in India!”

Musk will be in India from 21 to 22 April. Apart from Tesla, Musk is also expected to discuss introducing Starlink’s satellite-based wireless broadband Internet services to India.

Tesla is not yet present in India but a report by Reuters says production of India-bound right-hand drive cars has started in Tesla’s Gigafactory in Berlin. Reuters didn’t specify the model, but the Berlin factory only makes the Tesla Model Y.

The Indian government has been wooing Tesla to set-up a manufacturing facility there.

A new policy was announced last month, allowing companies to import up to 40,000 battery EVs (capped at 8,000 units per year) with a minimum CIF (cost, freight, insurance) value of USD 35,000, at a reduced import tax of 15 percent (from 100%).

To qualify, companies must invest USD 500 million, begin local production within 3 years, achieving a local convalue of 25 percent by the third year of production, progressing to 50 percent by the fifth year of production.

Global Times doubt if Tesla will succeed there, saying:

“India's EV industry is still at a nascent stage.

“As for Tesla, which focuses mainly on the mid- and high-end sectors and mature markets, nobody knows if it will find success in India.

“While India's EV market is growing, its size is small. Some statistics showed EVs accounted for just 2.3 percent of total passenger vehicles sold in India in 2023.”

The newspaper also highlighted India’s lack of charging infrastructure, poor power grid stability, as well as the country’s coal-heavy power grid:

“Reuters reported in September 2023 that India had stepped up the use of coal to generate electricity in a bid to stop outages caused by lower hydroelectricity output, as an increase in renewables was struggling to keep pace with record power demand.

“However, India's expansion of coal mines and plants may complicate its efforts to achieve ambitious climate goals. A power shortage is brewing in India, which will probably pose obstacles for the expansion of the country's EV market.”

The article also said India’s under-developed automotive vendors will not be able to support local production of electric vehicles.

“India's supply chain is another major challenge for the EV industry. One of the biggest issues is the limited domestic production of core components like lithium-ion batteries for EV. India is starting relatively late in trying to create an indigenous EV supply chain.”

Contrary to Global Times' claim, India has a strong-enough BEV supplier ecosystem. It's not as mature as China's, but it's good enough to support four homegrown Tata BEV models. Last year, Tata sold 69,153 units of BEVs, the company's best-ever record.

The Global Times article ended by saying “…it is advised that India consider strengthening cooperation with neighbouring countries and promote manufacturing development with a more pragmatic attitude.”

Want to take a guess who these neighbouring countries (it’s more like ‘this country’, singular) are?

The politically motivated response by China also brings to light how Elon Musk’s fortunes are now tied to Chinese politics. Tesla has enjoyed so many benefits from Chinese EV purchase subsidies that the Chinese government feels now entitled to comment on Tesla’s decision to invest into which country.

The Global Times’s criticism of India’s readiness for Tesla glosses over the actions of Chinese BEV manufacturers trying to get a foothold in India, which sold over 4 million cars last year – nearly 8 times more than Malaysia. For car manufacturers, India is a market that’s too big and too important to ignore because of geopolitics.

BYD for example, has expressed a goal of covering 90% of India’s electric vehicle market. It recently launched its Seal in India, joining the Atto 3 and e6.

BYD has previously proposed to build a USD 1 billion manufacturing plant in India, but the proposal was rejected by the Indian government over ‘security concerns.’

Meanwhile, China’s state-owned manufacturer SAIC has a joint venture with local company JSW to manufacture MG cars in Gujarat. The joint venture’s 100,000 units per year capacity will soon be expanded to 300,000 units, equipped to assemble xEVs.