Tesla entry not a major threat to electric vehicle OEMs, says CLSA

Even if Tesla launches a BEV at $25,000, CLSA feels that features and specifications would be 'meaningfully compromised' compared to its traditional models

As the buzz around US electric vehicle (EV) major Tesla’s potential India entry grows, capital markets and investment group CLSA said that even if the US giant launches a battery EV (BEV) at a price of $25,000, it does not anticipate significant threat to Indian auto original equipment manufacturers (OEMs).

 

Currently, the Tesla Model 3 and Model Y are the most affordable, priced around $35,000 at an ex-factory level in the US. Thus, Tesla needs to either sell the same models with reduced features to lower the cost for the Indian market, or incur losses.

 

CLSA feels that even if one assumes that the import duty is revised to around 15-20 per cent, the price would be significantly higher than most of the over 4 metres long electric SUVs offered by domestic players like Tata Motors (TaMo), Mahindra and Mahindra (M&M), Maruti Suzuki India (MSIL) and Hyundai Motor India (HMIL).

 

Even if Tesla launches a BEV at $25,000, CLSA feels that features and specifications would be “meaningfully compromised” versus its traditional models. Indian OEMs are offering “compelling features and competitive pricing”, CLSA said.

 

It further goes on to add that the situation would be similar to that of acceptance of the Harley X440 bikes by Indian consumers, which are priced 20 per cent higher than the Royal Enfield Classic 350, with sales figures of around 1500 units and 28,000 units per month respectively.

 

Interestingly, stock prices of Indian auto OEMs, who have EV-focused plans, have fallen in the past two weeks since the buzz around Tesla’s entry gained ground. M&M fell by 16.5 per cent, TaMo by 4.8 per cent, MSIL by 5.57 per cent and HMIL by 5.4 per cent. CLSA said that this was already factored in the recent de-rating of M&M, and it does not believe Tesla’s entry would have significant impact on TaMo, MSIL and HMIL.

 

Currently, import duty on cars priced above $40,000 in India is 110 per cent, including the agriculture cess, which CLSA believes is subject to change post reciprocal tariffs from the US.

 

The cheapest Tesla car Model 3 is priced around $35,000 in the US. With tariff lowered to 15-20 per cent, along with road tax, insurance and other costs, the on-road price would be $40,000 (₹35-40 lakh). If Tesla positions itself with Model 3 at on-road price, 20-50 per cent higher than e-Vitara, e-Creta, XEV 9e, it would not significantly impact domestic EV models.

 

Mahindra's XEV 9e and BE 6 have collectively registered booking value of ₹8,472 crore (at ex-showroom price) on the first day of opening. The eSUVs have secured 30,179 bookings. This is noteworthy considering that the total electric passenger vehicle sales in India was about 100,000 units for the calendar year 2024.

 

In India, BEV penetration is 2.4 per cent, compared to 12 per cent globally and 30 per cent in China. With narrowing gaps between internal combustion engines (ICE) and EVs, coupled with the government’s stringent emission norms (CAFE III and CAFE IV), CLSA believes that the BEV penetration in India could move up to 15 per cent by FY28 and 25 per cent by FY30. Thus, even if we assume that Tesla gains market share of 10-20 per cent in EVs by FY30, it would overall imply a PV market share of 2-5 per cent only.

 

   

Date	M&M	Tata Motors	Maruti Suzuki	Hyundai Motor	Nifty Auto
7/2/2025	3198	707	13047	1900	23460
10/2/2025	3137	696	12899	1859	23113
11/2/2025	3085	678	12718	1836	22574
12/2/2025	2986	684	12663	1808	22407
13/2/2025	2978	684	12668	1798	22344
14/2/2025	2941	680	12669	1807	22069
17/2/2025	2830	687	12759	1846	21952
18/2/2025	2788	682	12786	1810	21819
19/2/2025	2757	681	12679	1877	21809
20/2/2025	2840	690	12437	1855	22075
21/2/2025	2668	673	12320	1797	21506

 

BASE 100
Date	M&M	Tata Motors	Maruti Suzuki	Hyundai Motor	Nifty Auto
7/2/2025	100	100	100	100	100
10/2/2025	98	98	99	98	99
11/2/2025	96	96	97	97	96
12/2/2025	93	97	97	95	96
13/2/2025	93	97	97	95	95
14/2/2025	92	96	97	95	94
17/2/2025	89	97	98	97	94
18/2/2025	87	96	98	95	93
19/2/2025	86	96	97	99	93
20/2/2025	89	98	95	98	94
21/2/2025	83	95	94	95	92