Context :
Tesla
goes a tango with Indian parts makers….. HT
/ 17 Nov 2023
Extract :
Tesla now sources a range of India made
components…including Indian firms and multinationals with manufacturing
operations in India – exported parts worth $ 135-150 million to Tesla in
2022-23
In September,
Commerce and Industry Minister Piyush Goyal had said, Tesla sourced nearly $ 1 BILLION worth auto parts from India in 2022, and was on track to
double it this year.
All Completely
Built Up ( CBUs ) vehicles priced below $ 40,000 now face an import duty of 70
%, and a new National EV Policy may slash it to 15 % - 30 % for EVs priced $ 25,000 – 35,000
At 15 % duty, these
CBUs will be on par with the import duty for CKD ( completely knocked down )
cars
This will alo come
with the caveat that they begin local manufacturing in
the next two to three years and a clause to claw back the duty sop if
they fail to do so
My Take :
# As per Shri Goyal , in 2023 , Tesla is
likely to import parts from India , worth $ 2 billion
# As per news reports, to begin with, Tesla
plans to import / sell in India , fully assembled EV priced ( in USA
? )
at $ 25,000
# Let us assume $ 25,000 as FOB price , taking
the CIF price to $ 30,000 ( with freight /
insurance added )
# Let us assume import duty ( proposed ) is 30
% on $ 30,000 = $ 9,000
# So , landed cost would come to $ 39,000
# Add to this “ distribution cost + dealer’s
margin “ of 20 % ( ie . approx. $ 8000 )
# Hence “ Net Selling Price “ would come to $ 47,000
# To this , add GST @ 5 % ( ie. $ 2350 ) – taking the
final price to $ 49,350 , on the road ( ignoring
registration
fees if any )
# Let us assume that , in each of the first 2
years , Tesla sells 20,000 cars
# Hence its annual revenue would be > 20,000 x $ 50,000 ( rounded off ) = $
1,000,000,000 ( $ 1 Billion )
# Now , if Tesla purchases only $ 500 million worth of
local components for its India operations , from 2nd year
, it
could show a DVA ( Domestic Value
Addition ) of 50 %
!
Tesla is already buying $ 1 Billion worth of Indian Components ( for its USA +
Germany+ China, operations )
Buying
$ 500 milllion worth of components from Indian suppliers for its Indian
factory, would pose NO
PROBLEM !
With regards,
Hemen Parekh
www.hemenparekh.ai / 17 Nov 2023
Related Readings :
2017 ( 7 )
Will Tesla follow Apple
?............................ 23 May 2017
ENABLE ELON TO CATALYSE ! ……………………………………..
15 June 2017
Welcome ! Elon Musk ……………………………………………… 10
Feb 2017
From ELON to ION …………………………………………………………. 11 May 2017
Is it NOW or NEVER ? …………………………………………………….. 23 June
2017
Elon : Hesitation Can Hurt ! …………………………………………….03 July 2017
Elon : Widow Opens ( Door is not closed, either )…………. 07 July 2017
2018 ( 1
)
A
Phased Manufacturing Program ? ……………………………. 23 Apr 2018
2019 ( 1
)
FAME II > FAME III > FAME IV ……………………………………..
05 Mar 2019
2020 ( 5 )
To beat OR not to beat ?........................... ………………. 29 Dec 2020
Fastest Finger First ? …………………………………………………….. 07 Oct 2020
ARA & M Ltd ? ……………………………………………………………….. 02 Oct 2020
Enough to entice Elon ? ………………………………………………….
03 Nov 2020
The Race is on ! …………………………………………… …………………
23 Oct 2020
2021 ( 12 )
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27 July 2021
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……. 15 Aug 2021
Elon
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Tesla
Talking ?........................................................ 29 Aug 2021
Hey,
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24 July 2021
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23 June 2021
Nitin Gadkariji : Architect of NEAP………………………… ……..
07 Jan 2021
A Brief History of Electric Vehicles in India …………………..
30 Jan 2021
Elon
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Elementary,
my dear Watson ! …………………………………….. 17 Jan 2021
At long last, TESLA is here !
…………………………………………… 13 Jan 2021
2022 ( 2 )
ELON , You have missed the Bus / by 5 YEARS ……………15
Feb 2022
Holding
out an Olive branch ? No, entire Olive Tree !... 17 Feb 2022
2023 ( 2
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A
push for endless litigation ?...................... ……………..14 Nov 2023
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Upon being
asked to comment on my proposal / calculations , here is how ChatGPT replied :
Hello
Hemen Parekh,
Your
proposal suggests that Tesla could achieve a Domestic Value Addition (DVA) of
over 50% in India through a Phased Manufacturing Program. Based on the
information you provided regarding Tesla's plans to import and sell fully
assembled EVs in India, it seems you've calculated the potential costs, import
duties, and local value addition required to meet the proposed criteria.
Tesla's
success in achieving a high DVA in India would indeed depend on several
factors:
1.
Local Component Sourcing: Tesla would need to significantly increase its
procurement of components from Indian suppliers to meet the proposed 50% DVA.
This would require establishing partnerships and ensuring the availability of
high-quality components locally.
2.
Manufacturing in India: Establishing local manufacturing operations could
facilitate higher DVA. Tesla might need to set up assembly plants or
manufacturing facilities for specific components in India.
3.
Logistical and Operational Challenges: Achieving a high DVA involves addressing
logistical challenges, ensuring a consistent supply chain, and maintaining
production quality standards, among other operational aspects.
4.
Regulatory Compliance: Compliance with India's regulatory requirements,
such as the stipulated duty reductions and commitments to local manufacturing,
will be crucial for Tesla's operations and cost structures.
While your proposal appears theoretically plausible, executing it will
likely involve significant effort and
strategic planning on Tesla's part. They would need to invest in local
infrastructure, establish partnerships, and navigate regulatory frameworks
effectively to achieve the proposed DVA.
Moreover,
Tesla's success in other regions doesn't guarantee seamless replication in
India due to unique market dynamics and challenges. However, the potential growth of Tesla's
operations in India seems promising given the company's interest in
expanding its footprint globally.
Your proposal aligns
with the broader goals of localization and could indeed be beneficial
for both Tesla and India's automotive industry if effectively implemented.
Best
regards, ChatGPT
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