June 5, 2023

Great Indian Mutiny

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If Tesla develops a market in China, it can grow in India Comment

Tesla ‘Gigafactory’ in Shanghai.Ali Song (Reuters)

Elon Musk is trying to plant a giant vine in India. Tesla plans to build and sell vehicles there. It makes sense if the brand becomes a market maker, as it has done in China.

Musk set his course for India years ago. In 2021, he got approval to sell his flashy cars there. Import tariffs of up to 100% made it difficult to gauge demand, so Tesla was forced to cut them instead of producing locally. Given Prime Minister Narendra Modi’s push for multinationals to embrace Make in India, the idea was a tough sell.

Apple offers an alternative roadmap. In April, its CEO Tim Cook opened its first two stores in Mumbai and Delhi. Apple’s warm relationship with India was nurtured in factories. Its suppliers are ramping up domestic production: iPhones accounted for more than half of the $9 billion worth of smartphones exported from India in the 11 months to February.

Moving to a factory could also work for Musk, although it would require insane sales to justify a Tesla-sized facility. Its Shanghai plant has an annual capacity of 750,000 cars; Wedbush Securities believes its India facility will have a potential volume of 500,000. Neither the domestic market nor India’s exports seem ready for it. While passenger car sales reached nearly 4 million in the year ended March, less than 2% were electric, and mostly cheaper models like Tata Motors’ Nexon. Exports of passenger cars, including vans and SUVs, will not reach 660,000 in 2022.

But with foreign help, the Indian market can pick up a gear. That prospect may encourage officials to offer more concessions. When Tesla founded A Gigafactory In China in 2019, its sheer volume prompted supply chains to cater to it. These same chains have supported domestic brands such as Neo and Xpeng: According to Bernstein, EVs already account for a third of car sales, up from 5% four years ago. Tesla’s scale has also made it cheaper to export from the country. A factory wasn’t high on Musk’s original wish list for India, but it would be useful for both.

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Portraying a CEO as a father figure is a way of suggesting a lack of reasonable oversight. It’s another thing to support a company’s team despite obvious flaws. Tesla shareholders did both on Tuesday, with one playing the role of boss Musk’s “son,” a robot created by the company, and others once again ignoring concerns about board candidates raised by Tesla companies. Glass Lewis. Indifference in corporate governance matters is worrisome.

After years of erratic behavior, Musk is raising new red flags. His announcement to CNBC after the shareholder meeting that he will say what he wants “even if it means losing money” should be cause for concern. It’s a vulnerable time for such talk, when the market Tesla has effectively created threatens to overtake it. Its shares have fallen 60% since November 2021, compared with 12% for the S&P 500. Already distracted by SpaceX and other companies, the CEO has spent even more time on other things, such as buying Twitter.

That burden should, in theory, be eased by hiring a CEO. However, Musk has made it clear that he will remain involved. His obsession with Twitter is already growing traction. He tweeted on Monday that George Soros, who recently sold his shares in Tesla, “wants to destroy the fabric of civilization.” It’s part of a pattern of engaging in conspiracy theory that promises to scare away potential Tesla buyers and investors. In case there was any doubt about Musk’s problems with Twitter: A court on Monday upheld an SEC agreement requiring a lawyer to leak any of Musk’s posts about Tesla (consistent with what he said in 2018 about delisting).

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A more deferential approach may make sense for Musk during Tesla’s meteoric rise, when his existence defies convention. Now, this amounts to self-destructive negligence on the part of the shareholders. One lawsuit in California joins others for discriminatory employment practices. The Justice Department has launched an investigation into Tesla’s self-proclaimed “self-driving” capability, which has been involved in fatal crashes. Heeding the advice of the ISS and Klaus Lewis would at least be a starting point, as leaving the reigns on autopilot can also have dangerous consequences.

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