India’s largest luxury carmaker by sales volumes, Mercedes-Benz, which currently has a three-product EV portfolio in the country, and is set to introduce three more EV offerings in CY24, says the new EV Policy could help accelerate the adoption of zero-tailpipe emission vehicles in India.
Mercedes-Benz India’s Managing Director and CEO, Santosh Iyer is of the opinion that the recently-approved EV Policy will further the electrification push in India. “This policy will help accelerate EV adoption in India if more new players come in. More players coming in will only drive electrification not only with cars, as well as charging infrastructure,” Iyer told Autocar Professional in an interview.
With the Indian government recently paving the way for the entry of the most sought-after global EV brand – Tesla – into the country by giving a nod to the EV Policy that slashes tax on completely-built EV imports into India from nearly 70-100 percent to 15 percent for five years, the policy could impact incumbent players of the likes of luxury carmaker Mercedes-Benz India, which operates in a similar segment.
Hinting at Tesla as the most-awaited ‘new entrant’ in the Indian passenger vehicle market, Iyer said that a new entrant will push the electrification agenda faster than what the current adoption curve in India looks like. “We are big advocates of free trade and reduced tariffs. And while we will be able to also import cars at a reduced 15 percent tariff, the only thing not conducive from our perspective is the restrictive clause,” he said.
The clause Iyer refers to as ‘restrictive,’ is the investment mandate under the EV Policy of at least Rs 4,150 crore, to localise and make these electric vehicles in India within three years from starting the completely-built imports. “We are already invested in a CKD setup (in Chakan), and therefore, we could sell cars by localising them at a 15 percent duty.”
“Therefore, while it is not a disabler, the question is that the new player will compete in mass- and premium segments to the maximum level, and our stake in the entry-luxury segment is only 15 percent. Therefore, in that sense, while we do not know the competitor’s product strategy, they are going to operate in a different segment compared to where we operate,” Iyer said.
“We are very clear about our focus of operating in the luxury segment when it comes to EVs,” Iyer pointed out.
Iyer explained that several Mercedes-Benz India customers already have one EV in their households from the mass-market brands. “These customers have begun their EV journey and learning curve with these brands, and are likely to switch to a luxury EV in the future,” he said.
“When a new player comes in, there will likely be another brand’s car in our customers’ garages, but we will continue to focus on the attributes of top-notch configuration, and comfort levels when it comes to EVs, and offer a distinctive product offering. We will not like to go down on the price ladder,” Iyer pointed out.
“The price-value is an equation of what one offers, and while we do not have intentions to operate in the segment that the new entrant is looking at, we will continue with our strategy. We are already the first ones to localise an EV in the luxury car segment, and we have enough learnings from our exercise,” Iyer signed off.
While the US-based EV automaker Tesla has been in the fray to enter the Indian market for a while, the company is most likely to see its ambitions gaining ground with the new EV Policy that seemingly aligns with Tesla’s strategy of first testing the Indian market with vehicle imports, followed by investing into a local manufacturing base in the country. While there are reports of the start of production of India-bound Tesla vehicles in Germany, the company’s CEO Elon Musk has confirmed his visit to India.