Tesla is in talks with officials from five states in India to open stores, an office, an R&D center, and possibly a factory for production. At the moment, the company is choosing a place where it will start its official activities in the country. Meanwhile, many people point out that there is no market for Tesla in India as it is a country where a large percentage of the population is poor. Let's try to figure out if this is true.
Based on Worldometer elaboration of the latest United Nations data, the current population of India is 1,387,197,365 as of January 12, 2021. However, not all of the country's population is poor. It is obvious that there is significant income inequality within India as it is home to some of the richest people in the world as well as the poor.
India's standard of living also shows great geographical disparities. On the one hand, poverty is widespread in rural India, while most metropolitan areas have world-class medical facilities, luxury hotels, and entertainment facilities similar to those found in the developed countries of the first world. But a rural middle class is now emerging in India, and some rural areas are experiencing rising prosperity.
Tesla Model X on the roads of India | AutoArmy/YouTube
Many people assume that if most of the country's population is poor, then there is no market for Tesla. However, they need to understand that the company is not aimed at selling cars to the entire population of India. In fact, out of 1.387 billion people, the producer is targeting a smaller (relative to the entire population), but a rather wealthy segment of the population.
As sad as it may be, out of this population, about 1.3 billion people will not be able to afford a car like Tesla. However, there is still a market for the company of around 85 million people who can afford to buy a premium car.
addressable market. It is the 53M upper middle class professionals that are Tesla's addressable market - a market which has frequently expressed significant interest and which, thanks to a low cost of living, has disproportionate disposable income relative to total income.— Nafnlaus (@enn_nafnlaus) January 12, 2021
Thus, India has a huge market for Tesla's development, and many of the country's richest people have been waiting for the company to come here for several years now. Given the size of the Indian market, besides the start of sales of the California manufacturer's cars here, there is also a lot of sense in an R&D center, and perhaps even in a manufacturing or assembly plant.
At the moment, due to the high tariffs in India, Tesla cars will be expensive. Nevertheless, if the company has its own production, it will reduce the cost of cars to an acceptable level, which will make them more affordable. Thus, at some point, Tesla cars may become affordable for the middle class as well.
© 2020, Eva Fox. All rights reserved.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.