Starting a car brand from nothing isn’t easy. Just look at Rivian or NIO, two companies dedicated to producing electric cars whose future is uncertain. In general, entrepreneurs need many things, but three are essential:
- A differentiated product
- The ability to accept years of losses
- (A lot of) money
Tesla is very familiar with the three elements. The company had to spend nearly two decades since its founding in 2003 to turn its brand into a profitable business. It succeeded because it offered a differentiated product (its electric car) and because its investors accepted years of losses (about two decades). On the way to profitability, the company also burned a lot of money.
Among the companies that kept Tesla alive is, curiously, Toyota. Both worked together to bring an electric Toyota RAV4 to life in the early 2010s.
Investors and potential buyers also helped Tesla survive. Indeed, to start their projects, car companies often ask their potential buyers for money. We’re not talking about a loan, but rather a deposit to help the company take the first steps with the promise that, eventually, those buyers will be the first to receive the car.
That’s what Tesla did. It required customers to pay a $1,000 down payment to buy a Model S, which put the brand on the map after it rose to fame with the Roadster. The company has used the same strategy the Cybertruck and is planning on continuing the tradition with the future Tesla Roadster.
The problems with this type of strategy arrive when the company fails to meet its expected plans. Tesla, in particular, is known for this. We’ve been hearing about the next convertible sports car since 2017. Last year, the last thing we knew about it was that it was delayed.
The same happened to Tesla’s customers in India who, despite giving the company a $1,000 down payment on a car in 2016, have received no response from the company in regards to their order. And eight years later, they still don't have a Tesla vehicle.
They also don't have their down payment. And they want their money back.
The Love-Hate Story of Tesla and India
As so happens with many Tesla products, such as the Cybertruck and the Roadster, the company has been saying that it will launch a subsidiary in India for years.
In 2016, Tesla opened pre-orders for a Model 3 in India. The idea was simple: Tesla said that customers would $1,000 and receive their car in 2017. They didn’t know the final price, but the opportunity to be one of the first buyers in India to own one of Elon Musk’s cars was too good to pass up.
Since then, those who trusted the Tesla CEO have been living a nightmare. According to Rest of the World, prospective buyers didn’t know the car wouldn’t arrive in 2017. Or in 2019 or 2024. In fact, at the moment, there’s no delivery date for the Model 3s Tesla promised. The last time Musk addressed the matter, he mentioned that the arrival of cars in India would happen “as soon as humanly possible.”
Eight years later, customers still have no idea when their car will arrive. Many are tired and are asking for their money back, but it's not easy. Some say it took them years to get their deposit back and that doing do involved reaching out to the company numerous times.
One of the people affected is Varun Krishnan, founder of the technology blog FoneArena, who told Rest of the World he was the first customer to reserve a Model 3 in India. He says he didn't get his money back until 2022 and, like other customers, got it by pressuring Tesla employees in China and the U.S. that he connected with on LinkedIn.
Some customers have started to ask and put pressure on the company's U.S. employees to refund the $1,000 deposit they paid in 2016.
The case of the FoneArena founder is not unique. Pressuring employees or posting about their disappointment on social media has been the fast track for many to get their money back, or at least part of it. The return of the deposit isn’t required to be adjusted for inflation. With inflation, the deposit would be around $1,300 today.
Tesla’s problem was in plain sight for any manufacturer. Indian law requires companies to manufacture their vehicles in the country if they want to sell them without additional tariffs. If cars aren't manufactured in the country, India only allows 8,000 cars to be imported at a 15% tariff, but only if they cost less than $35,000. In addition, companies interested in selling in India must commit to investing in the country over the next three years.
Bloomberg states that Tesla’s interest in India is very tangible. The country is the third-largest market in the world for the automotive industry. However, entering and competing there is complicated.
As reported by the outlet, vehicles in India must be affordable and, in addition, have specific features that are attractive to the local public. Even though the electric car might have a competitive price, the people who can afford to buy a Tesla in India are wealthy customers, who place a high value on amenities and love overcrowded passenger compartments. This is precisely the opposite of Tesla's usual target audience.
To illustrate the disconnect, Bloomberg references an Autocar India review, where the author complains about all these details and a height that he considers too low for the tastes of the country’s customers. This is a problem for Tesla, which is trying to sell a specific model in this market: Much of its success is due to its production process, which allows for very few changes to its cars.
Then there’s the two-way game Musk is trying to navigate between India and China. In 2023, the company seemed to have moved closer to India, and the possibility of setting up a factory in India seemed closer than ever. However, subsequent meetings with senior Chinese officials didn’t go entirely well.
In fact, according to Reuters, Musk recently cancelled a visit to India, claiming that the company required him to postpone the trip. However, the news agency reported that some believe the Tesla CEO’s alleged interest in the Asian country was nothing more than a maneuver to calm investors when the company's stock was falling.
As of now, there’s no date for Tesla to enter the Indian market. There's also no date for when customers will get their cars, or a date for when they'll get their money back.
Image | Milan Csizmadia | Naveed Ahmed
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