Sources familiar with the discussions told Reuters that Tesla is looking for locations to open showrooms in three Indian cities and has recruited an executive to lead its lobbying and business activities ahead of its expected entry into the market.
In January, Tesla registered a local company in India, where it plans to import and sell the Model 3 sedan by the middle of 2021, aiming to appeal to wealthy buyers in a niche market.
Three sources said the world’s most valuable automaker is looking for commercial properties ranging from 20,000 to 30,000 square feet each in the capital New Delhi, financial hub Mumbai in the west, and tech city Bengaluru in the south to open showrooms and service centers.
Tesla is moving faster, as shown by the search for showroom space and Khurana’s appointment.
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According to sources, global property consultancy CBRE Group, which was hired by Tesla for the showroom searches, has been surveying locations for several weeks and is concentrating on locations that will offer the company better access to wealthy buyers.
Some premium car showrooms in expensive luxury areas of metro cities are between 8,000 and 10,000 square feet, but in India, where high-end real estate space is in short supply and property prices in New Delhi and Mumbai are among the highest in the world, most showrooms are much smaller.
One of the sources, all of whom declined to be identified as the talks are private said “If you look at Tesla’s showrooms globally, they are like experience centers. It would look at replicating that with some modifications for the Indian market,”.
It does not comment “On work we may be doing on behalf of our clients” said CBRE.
Khurana served on a government panel on the future of transportation that was chaired by Prime Minister Narendra Modi’s top scientific advisor. According to two reports, he is also in charge of Tesla’s market entry phase in India in his new position.
However, India is unlikely to be an easy market for Tesla to break into.
The country has no charging infrastructure and high import taxes on automobiles and low electric vehicle adoption (EVs).
Just 5,000 electric vehicles were sold in India last year, out of a total of 2.4 million cars sold, while 1.25 million new energy vehicles were sold in China. Analysts claim that as the government focuses more on promoting clean vehicles, India’s growing number of affluent customers makes it a market the automaker can’t ignore.
Though Tesla intends to import cars initially, India’s road minister told Reuters last month that the government is willing to provide incentives to ensure Tesla’s production costs are lower than in China if it commits to local manufacturing.