India Is A Great Consumer Market, But Only For The Patient. Does Elon Musk Know That?

For all the breathless reporting on American car maker Tesla’s imminent entry is expected to send Elon Musk fans into raptures and global auto giants begging for mercy.

The total investment from Tesla at this point is only Rs 35 lakh a month. This is in the form of a showroom in Mumbai’s Bandra Kurla Complex.

Add one more showroom in Delhi and maybe it will be Rs 70 lakh a month. Because that is the cost of two showrooms of around 4,000 square feet each. That being the size of the Mumbai showroom, it is unlikely Delhi will spring any major surprises.

Even two-wheeler showrooms are bigger in many cases and most car dealerships are 5,000 square feet and upwards, including in big cities.

A 4,000 square foot space is not unusual; there could be even smaller ones, but this is not the giant killer that Tesla is being made out to be.

Not just that, its surprisingly low-intent, test-the-waters entry strategy is only revealing that Tesla can be a great engineering product but is not a company that wants to get its hands or feet dirty as other auto giants have done in their experiments with India.

Not surprisingly, people are speaking up.

India Isn’t Easy To Crack

Sajjan Jindal, chairman of the JSW Group that also owns MG Motors, has said that Tesla's entry into India’s electric vehicle (EV) market will not be easy, as the company is set to face stiff competition from domestic players like Tata Motors and Mahindra & Mahindra.

Speaking at an Ernst & Young 'Entrepreneur Of The Year' awards, Jindal highlighted, “Musk is not here. He is in the US. He can’t be successful in India! We Indians are here. He cannot produce what Mahindra can do, what Tata can do.”

Jindal did acknowledge Musk’s genius.

“He is super smart, no question about it. He’s a maverick, doing spacecraft and all that. He’s done amazing work, so I don’t want to take anything away from him. But to be successful in India is not an easy job.”

Jindal has only summed up what every business, domestic or international in India knows fully well. You could build cool electric cars and reusable rockets, but it takes that and more to succeed in India.

Or you get the President of the United States to bat for you. But even that may not be enough because a close-to-zero import duty demand, going by reports, is tough to offer.

Is Tesla Suited To India?

The Indian consumer can be idiosyncratic, and across product categories. In cars and two-wheelers, for instance, customers want to be sure there is after-sales service and a visible one.

And that the product in question does well on Indian roads. For example, it may not help that the ground clearance for some Tesla models might be a little low for Indian roads.

That can, of course, be engineered. Then, adding a loud horn, which is again an imperative for Indian vehicles and roads.

But all that means more customisation and thus cost.

It will take more than just picking vehicles off an assembly line in Berlin or wherever and putting it on a ship bound for a Mumbai port.

Multinationals who have invested in India in the long term have spent time and effort in understanding the market and then succeeded.

And they have failed too.

The likes of Ford and General Motors have come and gone, though Ford is now returning.

But other car manufacturers who have had patience have done well, though within their own cycles, including the Europeans, Japanese and Koreans.

Perhaps Musk’s genius has allowed him to see what others have taken longer to understand.

India is a great consumer market, but only for the patient.