South Africa-born Elon Musk, Founder and CEO of SpaceX and CEO of Tesla, certainly isn’t the shy, retiring type. Musk speaks his mind, and doesn’t care who he might offend. Last year, when Microsoft co-founder Bill Gates bought a new electric supercar, a Porsche Taycan, Musk put out a tweet saying, ‘My conversations with Gates have been underwhelming to be honest’. This was in response to a Tesla fan’s online comment, saying he was surprised that Gates chose the Taycan over one of Tesla’s electric cars. Gates, who had in an earlier interview on YouTube said that Tesla is the one company that has really driven growth in the electric car market, did not respond to Musk’s ‘underwhelming’ comment. Maybe he knew Musk enjoys a bit of trash-talking every now and then; the Tesla CEO has, at various occasions in the past, tweeted that Facebook founder Mark Zuckerberg’s understanding of artificial intelligence is limited and that Amazon founder Jeff Bezos’s plans to colonise space make no sense.
But what’s a few catty jibes between fellow billionaires, and if subtle diplomacy isn’t one of Musk’s biggest strengths, building electric cars certainly is. In the 15 odd years that he’s been at it, Musk has defied all odds, coming out on top in the electric vehicles space. Today, with a market capitalisation of more than $800 billion, Musk’s electric car company — Tesla Inc — is more valuable than any other car company on earth. Not just that, the stock market’s belief in Musk’s vision for the future of the auto industry is so all-consuming that it currently values Tesla more than the combined worth of 10 of the world’s biggest carmakers, including the likes of Toyota, Volkswagen, GM, Ford, Fiat Chrysler, Honda, Peugeot, Hyundai, and Nissan. More importantly, in terms of EV capabilities, Tesla is miles ahead of every other automaker, including some that have been building cars for 100 years or more. How Tesla has managed to leapfrog ahead of global automotive giants is a David vs Goliath tale, one that seems to have been lifted straight from the biblical Book of Samuel.
Some self-proclaimed petrolheads still choose to dismiss electric cars publicly, but in their hearts, even they probably know that the internal combustion engine is fighting a losing battle against the electric motor. With rapidly improving performance, high-end electric cars — like the ones produced by Tesla — have inveigled car enthusiasts to begrudgingly accept EVs as the inevitable future. And while a handful of other carmakers (Porsche, Rivian, Audi, Jaguar, BMW, and Polestar, to name a few) are also producing electric cars that are pretty good, Tesla is quite clearly head and shoulders above the competition. The batteries and electric motors used in Tesla cars are significantly more advanced, more powerful, and for now, the competition simply can’t keep up. That’s what you get when you have carmakers with decades of experience of building internal combustion-engined cars competing with a small, scrappy outfit that was set up, right from the word go, to only produce electric cars.
While the EV trend was till recently seen as a trend only in the richer countries in the west, things are beginning to change in India as well. Tata Motors is one domestic car company that seems to be doing particularly well with EVs, selling around 2,600 units of the Nexon EV in 2020, making it the largest selling electric vehicle in India. The company was quoted as saying that EVs’ contribution to its growth was going to be even bigger in the coming years. Mahindra is also expected to launch an electric variant of its XUV300 towards the end of this year, and Maruti might launch an electric Wagon R in the next few months. This uptick in EV sales in India could not have come at a better time for Tesla, as it was revealed last week that the American company had finally made its first move to launch in India. On January 8, Tesla India Motors and Energy Private Ltd was registered as a private subsidiary of an unnamed international company, with an office on Bengaluru’s Lavelle Road. Gaurav Gupta, Principal Secretary, Commerce & Industries in the Karnataka government was quoted in Mint as saying, “We have been interacting with Tesla for the last few months and it is happy news that they have decided to incorporate their company here.” According to Mint, the state government had indicated that Tesla would open an R&D centre in the city.
The three directors of Tesla India include David Jon Feinstein, the company’s Global Senior Director for Trade Market Access and Vaibhav Taneja, Tesla Inc’s Chief Accounting Officer, who, along with Chennai-born Jayaprakash Vijayan, the company’s Chief Information Officer, are the two top ranking Indians based out of Tesla’s headquarters in Palo Alto in California (Deepak Ahuja, the company CFO, retired in 2019). The third director is Venkatrangam Sreeram, a tech entrepreneur. He is listed as the Managing Director of the Chennai-based AI firm Clearquote Technologies India Pvt Ltd., and is also the director of Bengaluru-based Xenon Automotive India Private Limited, which specialises in providing hardware and software solutions for automotive industry in areas like dealer and fleet management. Among the clients listed on Xenon’s website are Tata Motors and Jaguar Land Rover. Interestingly, the day before the news of Tesla having registered their Indian subsidiary broke, The Economic Times reported that there was a ‘buzz in the market’ that Tesla was close to signing an MoU with Tata Motors to use the latter’s Indian manufacturing facilities to make their cars for the local market. The Tata Motors share price surged 25 per cent in two days on the back of these rumours, hitting a 52-week high.
To be sure, talk of Tesla’s imminent foray into the Indian market had been floating around for a long time. Union Minister for Road Transport and Highways, Nitin Gadkari, was the first to confirm that the American company would start selling its cars in India in 2021 and depending on response, may look at setting up assembly and manufacturing operations in the future. The news was later confirmed by Musk on Twitter in October, when replying to a question from Tesla Club India, saying “Hey Elon, just thought we’d put this out here. We wait and hang on to hope wrt ‘hopefully soon’ for India Tesla entry. Would love to hear of any progress in this regard,” he said ‘Next year for sure.’ Much of Tesla’s sales currently comes from its dominant position in the US EV market. Musk’s push into markets like China, and now India, is part of his global ambition of selling 20 million Teslas by 2030. “I’m not saying for sure we’ll hit 20 million vehicles. But it does seem like a good goal to have because that would mean that we’re replacing one per cent of the global fleet per year,” Musk was quoted telling investors last year. The Indian factory, when it comes up, will be part of this big international push. Besides its facilities in the US, Tesla also manufactures cars in the UK, Netherlands, and China, while new factories are being built in Grünheide, Germany and Austin, Texas. The company also runs 438 Tesla Motor Stores across the world, and around 100 service centres.
Though Musk himself has never spoken in any great detail about Tesla’s India plans, analysts at top investment firms who have an inside track of the company’s working, hold high hopes for the country. Dan Ives, managing director of Wedbush Securities, told Bloomberg recently that in five years, India will ‘represent 10 per cent of overall demand for Tesla’. He went on to add, ‘The demand picture has changed, and now with Giga 3 built out in China, Berlin, and Austin, India is next.’ Tesla’s ‘Gigafactories’ are giant manufacturing facilities that make the all-important car battery, besides other vehicle components. The first Gigafactory in Nevada, in the US, when fully complete, is expected to cover over 10 million square feet of space spread over hundreds of acres of land. Tesla currently runs two such Gigafactories in the US and one in China. One more is under construction in the US, and one in Germany. These Gigafactories are essential because of the company’s unending demand for batteries. “Tesla’s mission is to accelerate the world’s transition to sustainable energy through increasingly affordable electric vehicles and energy products,” the company says on its website. “To ramp production to 500,000 cars per year, Tesla alone will require today’s entire worldwide supply of lithiumion batteries. Tesla currently produces more batteries in terms of kWh than all other carmakers combined.” The Indian facility, if it is indeed a Gigafactory, would be the company’s sixth Gigafactory.
Tesla cars emerging from the assembly line at a US facility
Where Tesla’s factory will come up in India remains to be seen, and much would depend on which state will offer the best deal. Musk is known to be a shrewd negotiator. After repeatedly hinting about coming to India since 2017, analysts say that he held back setting up Tesla India because of the country’s onerous tax regime, and lack of infrastructure. He had even put out a tweet saying, ‘Maybe I’m misinformed, but I was told that 30 per cent of parts must be locally sourced, and the supply doesn’t yet exist in India to support that.’ That seems to have prompted the government to make big changes in its policy towards EVs. GST on electric vehicles has since then been reduced from 12 per cent to five per cent, and Rs 10,000 crore was allocated as part of a three-year programme to set up 2,700 charging stations across the country by 2022.
So, what car would Tesla launch in India? The company currently has a range of four electric cars, starting with the Model 3 sedan, which is priced between $30,000-47,000 in the US, and is the least expensive of the bunch. Next up is the Model Y, which is a compact SUV, with prices starting at $34,000. The Model S is Tesla’s full-sized premium luxury sedan, with prices starting at $62,500 and the Model X is a large-ish, seven-seater SUV that’s priced from $73,000 and above. The Tesla Cybertruck and Roadster are currently under development, and might be ready by the end of this year. The former is a rather outlandish electric pickup truck that may be priced at $40,000 and above, while the latter is an all-electric sports car, which is expected to cost as much as $200,000.
Tesla Model 3
While the Cybertruck and Roadster will almost certainly make it to India in the foreseeable future, Tesla is likely to start its India innings with the cheapest car in its range, the Model 3. Available in three different variants (Standard Plus, Long Range AWD, and Performance), the Model 3 can seat up to five adults, has a range of anywhere between 420-565km, can accelerate from zero to 96kph in as little as 3.1 seconds, has a top speed of up to 260kph, and can be had with standard rear-wheel-drive or with the more expensive dual-motor AWD. Inside its cabin, the Model 3 does away with physical buttons, levers, and switches almost entirely; everything is controlled via a centrally mounted 15-inch touchscreen. When charged via a dedicated Tesla ‘supercharger’ charging unit, a 15-minute charge provides a 280km range, which is downright impressive. Charging via regular household outlets will definitely be possible, though almost certainly much slower. In India, Tesla will hopefully work closely with the government towards the nationwide installation of its supercharger network, without which the usability of its cars might be a bit limited.
The Model 3 is fitted with rear-, side-, and forward-facing cameras, forward-facing radar, and 12 ultrasonic sensors, which give it some spatial awareness; the car can detect nearby traffic, can potentially prevent collisions, and can help the driver with tricky parking manoeuvres. It has some basic ‘autopilot’ features, though drivers must remain fully attentive and must be ready to take over immediately, as and when required. Autopilot features are expected to improve further with software updates in the coming months and years, and according to Tesla, the Model 3 is already fitted with hardware that will allow fully autonomous driving at some time in the future. In the Indian context, self-driving cars remain a pipedream, given that our overly chaotic road and traffic conditions will likely bring any AI-based self-driving algorithm to its knees. Of course, there are already some Teslas in India, all owned by the super-rich. Mukesh Ambani has been seen being driven around in a Model S, while Essar scion Prashant Ruia and actor Riteish Deshmukh have been noticed driving the Model X. While these are all men who own a fleet of luxury cars, for the regular buyers Tesla will not come cheap. With stiff import duties levied on CBU imports, prices for the entry-level Model 3 could start at around Rs 50 lakh, going up to Rs 75 lakh or more for the top-end variants. The Model Y compact SUV might come in at around Rs 60 lakh, while prices for the Model S and Model X are likely to start at upwards of Rs 1 crore.
Tesla Model X
The prices are certainly in the premium-plus range, the cars’ usability may be hampered by the lack of an EV charging infrastructure in the country, and yet, we don’t expect any of those factors to prevent affluent buyers from splurging out on a shiny new Tesla. The thing is, what’s the point in travelling business class if you aren’t being driven to the airport in an expensive, beautifully-made electric car? After all, one must do one’s bit for the planet. Prime Minister Narendra Modi had visited Tesla headquarters in the US back in 2015. At that time, bringing Tesla to India wasn’t the primary objective. Instead, the aim was to explore if Tesla’s expertise with solar panels (which can be installed on rooftops and can generate enough power to take care of all household energy requirements) could somehow be used in India. However, Tesla’s solar power technology may have been too expensive or too complicated (or both) for India since things have not moved ahead on that front in the last five years. Musk, on his part, seemed to be more interested in selling Tesla’s electric cars in India.
T hat Musk called out Gates last year, for choosing a Porsche over a Tesla is rich in irony if we go back in time and look at Jeffrey Straubel’s (an engineer from Stanford University and one of Tesla’s co-founders) first efforts at building an electric car. In the years 2000-2001, Straubel spent all of $1,600 to buy an old Porsche that was on its last legs, and single-handedly converted it to electric power. For this, Straubel made his own electric motor controller, his own charger, and even wrote the software that would make the entire package work. His electric Porsche had a range of less than 50km, but it was a start, and Straubel was hooked. Straubel later tried to raise money for developing an electric car concept, and met Elon Musk sometime in 2003, who agreed to give him $10,000 for his development work on EVs. Musk was already a successful entrepreneur at that time, having netted $22 million from the sale of his first startup, Zip2 (a company that initially helped provide local businesses with a basic internet presence, and later started providing online city-guide software to various newspapers — all heady stuff back in the 1990s), which he had sold to Compaq in 1999. After selling Zip2, Musk had moved on to his next venture, X.com, an online banking and finance company that later merged with PayPal, a service that made it easy for its users to make and receive payments online.
Tesla Model S
PayPal was set up by one of Musk’s competitors, Peter Thiel, who later edged Musk out of the company after X.com merged with PayPal. Musk still retained a stake in the company however, and when eBay bought PayPal for $1.5 billion in 2002, Musk was richer by $250 million, which is Rs 1,800 crore in today’s money. Musk was just 31 years old in 2002; with the money he had in the bank, he could have chosen to buy a luxury yacht, retire in Monaco, and not work for the rest of his life. But he had much bigger fish to fry. At the time when Musk met Straubel, two other engineers in California — Martin Eberhard and Marc Tarpenning — were also trying to figure out ways to build and sell electric cars. The talented duo wanted to go after luxury car buyers with an electric sports car that would be fast and fun to drive. The two incorporated their electric car company in July 2003, naming the new company Tesla. The name was chosen because it sounded ‘cool,’ and also to pay homage to Nikola Tesla, the brilliant Serbian-American engineer who did pioneering work on electric motor development. Tesla initially failed to raise money from venture capitalists, who were openly sceptical about the idea of starting an electric car company from scratch. The disbelief wasn’t too surprising if you consider the fact that the last successful car company to be set up in the US was Chrysler, which was founded way back in 1925.
Eberhard and Tarpenning decided to licence EV tech from AC Propulsion, a small company that was set up in California in the early-1990s. The company had, at the time, built a few units of the tzero, an electric sports car that wasn’t much to look at but could accelerate from zero to 100kph in just 3.6 seconds, and was electronically limited to 170kph. Its makers claimed the tzero could even hit a top speed of up to 230kph with the electronic restrictors removed. Straubel, who also had friends at AC Propulsion, was impressed with the tzero, and borrowed one for Musk to drive.
Musk, who was blown away by the car’s performance, offered money to help AC Propulsion develop the car further so that it could be manufactured on a bigger scale and perhaps be offered to buyers in limited numbers. The AC Propulsion team was simply not interested, preferring to run the company as a hobby project. Musk, however, was convinced at that point that building a high-performance electric car, which could then be sold at a premium to luxury-segment buyers, was the way to go. When Eberhard and Tarpenning decided to license AC Propulsion’s technology for Tesla, the ACP guys let them know that one Elon Musk was interested in funding an EV project. The Tesla duo met Musk, and managed to convince him to put his money into Tesla, netting a $6.5 million investment from him in their fledgling electric car company. With this, Musk became Tesla’s biggest shareholder, and also the chairman of the company. Straubel, who already knew Musk from their meeting in 2003, was also hired at Tesla, while Eberhard was named CEO. The next few years were spent in massive development activity — electric motors, controllers, li-ion batteries, controllers and battery management systems, in addition to work on chassis, suspension, interiors, and dozens of other elements that go into making a modern car. Only, this was way more complex than just making a brand-new car from scratch; Tesla required EV-related knowledge and expertise that simply didn’t exist back then, forcing the team to be inventive and come up with their own solutions as they went along.
Along the way, Musk and Eberhard did not get along, with the two having major differences of opinion regarding how Tesla should be run. With Musk calling the shots, Eberhard was demoted from CEO to President of Technology in 2007, and finally had to leave the company by the end of that year. Eberhard has been quoted in Musk’s biography (authored by prominent American writer and business/technology journalist, Ashlee Vance), where he says, “It was a mistake. I wanted more investors. But if I had to do it again, I would take his [Musk’s] money. A bird in hand, you know. We needed it.” With Eberhard already out, Tarpenning also chose to leave Tesla in 2008, which left Musk in undisputed charge of the company. (Straubel stayed on at Tesla as chief technical officer right up until mid-2019, after which he transitioned to an advisory role.)
Starting around 2008, Musk has never lifted his foot off the pedal, pushing relentless growth and development at Tesla, taking on all comers with the grit of a bulldog. The company’s small size gave it agility that bigger companies couldn’t hope to match, and major advances in computing technologies, simulation, and computer-aided design allowed Tesla to get things done at a fraction of the costs at which the big guys were used to doing things. Musk fostered a totally driven, can-do work culture at Tesla, which focused on getting the job done as quickly and efficiently as possible, at the lowest cost, every single time. Failure was never an option at Tesla. And the company has never looked back.
A Tesla charging station in California
Tesla’s growing status as the world’s leading manufacturer of luxurious, high-performance electric cars has led to Musk wanting more. With most major car manufacturers now gunning ahead with fast-track EV development, throwing big money on battery, electric motor and software research, Musk knows that Tesla will have to work harder than ever before to keep its lead over bigger competitors. While Tesla has surpassed every other carmaker’s market capitalisation many times over, the company still works with relatively low volumes. 2020 was the first year in which the company made half a million cars. Furthermore, Tesla produced its one-millionth vehicle just last year, taking 12 years (from 2008 to 2020) to reach that milestone. That’s not too bad, but for some added perspective, do note that a company like Toyota (which has been producing cars for the last 85 years and has a market capitalisation of $200 billion, just one-fourth of Tesla’s m-cap) sells more than 10 million cars per year. Up until now, Tesla hasn’t been too bothered with volumes, choosing to focus on high-end luxury electric cars. But that may change soon. Back in September last year, Musk said a new generation of EV batteries is being developed, which will be more powerful, longer-lasting, and only half as expensive as the current lot. According to Musk, production of these next-generation batteries is likely to commence by mid-2023. This, along with more efficient production processes at Tesla’s existing and new manufacturing facilities, may allow the company to start building lower-priced, more affordable electric cars without compromising on things like power, performance, and build quality.
While focusing on reducing costs and improving batteries, electric motors, and other EV paraphernalia, Musk and team are also looking at where the automobile may be going in the future; autonomous driving and self-driving cars that need little or no human intervention. The ‘autopilot’ feature on the current Tesla range of cars is a small step in that direction. Tesla says that hardware required for autonomous driving is already all there, and the system’s functionality will keep improving with regular software updates in the future. However, while car buyers may be ready to hand over the steering wheel to the car’s onboard computers, fully autonomous driving will be subject to country-wise regulations, as there may be significant potential for things to go wrong. The current autopilot feature on Tesla cars can only provide some degree of assistance to drivers, under certain conditions — it’s not a system that lets the car drive itself without human intervention. Driving a car on public roads, with everchanging road and traffic conditions, is an incredibly complex task that’s currently best suited to human drivers. Radar, sensor, and AI technologies still have a long way to go before they become 100 per cent dependable, under every imaginable driving scenario. Tesla, of course, is in it for the long run, and will keep up development work in the AI-powered autonomous driving space until it’s 100 per cent ready for the real world. When the time is right, expect Tesla to get there first.
Today, if Tesla is deemed more valuable than all the other major carmakers put together, it’s because of its potential to deliver more in the years to come. Better cars, better technology, and a better ownership experience. “The US is still great with respect to innovation and fostering entrepreneurship. We don’t want to be complacent, and we want to ask how we can make it better over time,” said Musk last month, speaking to The Wall Street Journal. He added that the government should lay down the rules, see to it that those rules are being properly enforced and then just get out of the way and let people get on with it. “My recommendation would be spend less time in conference rooms, less time on PowerPoint, and more time just trying to make your product as amazing as possible. If you don’t love it, don’t expect others will either,” said Musk in the WSJ interview.
In the time span of 25 years, Elon Musk has amassed an incredible amount of personal wealth (he is about three times as rich as India’s own Mukesh Ambani), has built up the world’s most advanced electric car company, and with SpaceX, also has the world’s most innovative, cost-efficient aerospace manufacturing and space transportation company in the world. Working closely alongside NASA and the US government, Musk has, for the last two decades, been revolutionising access to space, producing dramatically better launch vehicles and rocket engines, and reducing the costs of putting satellites in space. What Tesla is doing for personal transportation on land, SpaceX is doing for space travel. Terms like interplanetary spaceflight and the colonisation of Mars are freely used at SpaceX, with one of Musk’s stated objectives being to fly the first human beings to Mars in 2024. Had it been some other company, headed by someone other than Musk, these might have been dismissed as whimsical flights of fancy. With Musk in the driver’s seat though, we wouldn’t be too surprised if he actually pulls it off.
EV REVOLUTION KICKS OFF IN INDIA
While Tesla’s India entry has now been confirmed, India is not new to electric vehicles, though the record has been quite spotty
While the electric cars scene has been gently bubbling away in India for many years, 2021 might finally be the year when EVs really pick up pace, and go mainstream in a big way. India’s first electric car, the dinky little Reva from Bengaluru, was launched back in 2002 (way ahead of Musk’s first Tesla, which came out in 2008), and was quite remarkable for its time. With a range of 80km, a top speed of 50-55kph and a small cabin that could still seat two adults, the Reva offered a genuinely workable alternative to small IC-engined hatchbacks, especially for those who did not have to commute more than 30-40kms per day. Of course, the Reva wasn’t very safe, and at Rs 2.50 lakh ex-showroom, it was dismissed as a mere toy for the slightly eccentric.
Today, almost two decades later, electric cars still haven’t caught on in India in a big way, though part of the reason is also that civic authorities and the government haven’t really made any efforts at all towards setting up an EV-charging infrastructure. How can people buy electric cars if there’s nowhere to charge those cars? Car manufacturers, on the other hand, have steadily been introducing a few electric cars for people who don’t mind the fact that they can only charge their EVs at home. The Reva, surprisingly, is still around. Mahindra bought over the Reva Electric Car Company a few years ago and the Reva was re-branded as the E2O. It has undergone many mechanical and cosmetic updates, and now comes with four doors (the original only had two doors) and a bigger cabin. Unfortunately, it’s still seen as little more than a toy. Mahindra Electric also has the bigger eVerito electric sedan in its line-up. It looks terribly dated (it’s based on the 15-year-old Dacia Sandero), and despite having a claimed range of up to 180km, finds no takers these days. The eXUV300 compact electric SUV, which is expected to arrive early next year, may be the EV game changer that Mahindra needs.
Tata Motors is the company that seems to be currently leading the EVs pack in India. The Nexon electric crossover was the best selling electric car in India in 2020, with sales of over 2,000 units in 2020. A safe, modern, comfortable, and well-built vehicle that’s fitted with a 30.2kWh lithium-ion battery, the Nexon EV has an electric motor that delivers 245Nm of torque, allowing it to go from zero to 100kph in less than 10 seconds. With a full charge, the driving range is an impressive 310km. Priced at Rs 14-16.25 lakh (ex-showroom), the Nexon has set the template for practical, affordable electric vehicles in India. Tata Motors also has the lower-end Tigor EV in its electric line-up, while electric variants of the Altroz and Tiago hatchbacks are expected to arrive this year. At the more premium end, the Tata-owned Jaguar Land Rover (JLR) is also doing well with EVs, with more than 50 per cent of JLR’s global sales comprising electric vehicles in the last quarter. The all-electric Jaguar I-Pace will also be launched in India this year, albeit with a price tag that’ll be upwards of Rs 1 crore.
Other domestic car manufacturers in India haven’t really been doing much about EVs; perhaps in the belief that it’s still too early for electric cars to catch on. Maruti, which has been surprisingly slow with EV development, may launch an electric variant of the Wagon R hatchback this year. Hyundai doesn’t seem to have plans of launching any EVs at the lower end of the spectrum, but will launch the updated Kona electric SUV, with reworked cosmetics and mechanicals. The Kona is an impressive vehicle, with a range of more than 450km, but its Rs 24 lakh price tag puts it out of reach for most mass market buyers. In the high-end electric cars segment, in addition to the aforementioned Jaguar I-Pace, this year will also see the launch of the Porsche Taycan supercar, the Audi e-tron SUV and the Volvo XC40 Recharge SUV. The Mercedes-Benz EQC, which was launched in India last year, will remain available this year. However, with their stratospheric price tags, these premium electric cars and SUVs will still only cater to a very small audience. What’s exciting is that EV tech used on these expensive cars will hopefully filter down to more affordable vehicles in the next few years. At long last, the EV revolution has finally kicked off in India, and there’s no looking back.
