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Despite concerns over Tesla’s entry into the Indian market, analysts believe that leading domestic automakers like Mahindra & Mahindra remain well-positioned to thrive. Speaking in an interaction with ET Now, market expert Sandip Sabharwal of asksandipsabharwal.com dismissed fears surrounding Tesla’s impact on Indian companies, calling the recent sell-off in auto stocks exaggerated and irrational.
Sabharwal pointed out that homegrown auto giants like Mahindra & Mahindra (M&M) continue to enjoy strong demand, despite concerns over Tesla’s entry.
“The sell-off in these stocks started just a day after Mahindra’s new models received over Rs 8,000 crore in demand in a single day, which is completely irrational,” he noted.
Tesla has announced its plans to set up a manufacturing facility in India, benefiting from duty concessions on its first 8,000 units if it commits to an investment of Rs 4,500 crore. While this has triggered nervousness among investors, Sabharwal believes such fears are misplaced.
Moreover, Tesla’s market positioning differs significantly from that of Indian automakers. While some consumers might purchase a Tesla as a status symbol, its ability to capture mass-market demand remains questionable given the high price point and infrastructure challenges.
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“For Tesla to truly compete, it needs to establish a robust service network, which will take time. People need confidence when buying a car, and right now, the value proposition beyond the brand name remains uncertain,” he explained.
This underscores the fact that Indian automakers have built strong brand loyalty, competitive pricing, and a widespread service network, which Tesla lacks at the moment.
Additionally, an established player like M&M have been at the forefront of India’s EV revolution, already rolling out affordable, well-suited electric vehicles (EVs) tailored to Indian roads and consumer preferences.
Looking ahead, a recovery in auto stocks is expected as investor sentiment stabilizes.
Sabharwal remains optimistic about the sector’s growth, citing auto demand as a key driver for consumption recovery in the coming year.
“The auto segment should see a strong recovery in 2025, given the positive demand outlook and strong fundamentals of companies like Mahindra & Mahindra,” he stated.
Therefore, while Tesla’s India plans have caused temporary market jitters, Indian automakers remain fundamentally strong and well-equipped to compete. With a strong distribution network, well-priced vehicles, and homegrown expertise in navigating India’s unique automotive landscape, companies like M&M are expected to have only little to fear from Tesla’s arrival.
For investors, this may present an opportunity. The recent corrections in auto stocks may be an overreaction, making them attractive at current levels. As the market digests the long-term realities of Tesla’s presence, Indian auto stocks could emerge stronger than ever.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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