How Tesla Used an Ancient Chinese Military Strategy to Conquer India and Challenge China
Introduction: Tesla’s Dilemma in China and Its Bold Strategy in India
Tesla is the world’s leading electric car brand, known for its innovation and disruption. But even such a successful company has to face huge challenges from the Chinese market. Under the impact of the COVID-19 pandemic in 2020, Tesla encountered a decline in sales and an increase in competition in the Chinese market. To cope with this crisis, Tesla devised a bold and long-term strategy: to establish new factories and sales networks in India. Behind this strategy, there is a story full of challenges and opportunities.
The story of Tesla in India is told by the company’s senior strategic officer himself. He told us that when they found it difficult to change the situation in the Chinese market in the short term, they decided to adopt an ancient and wise Chinese military tactic: encircling Wei to rescue Zhao. This tactic means avoiding a direct confrontation with a powerful enemy, but attacking their unprepared weakness. They thought India was such a weakness, a market with huge potential and demand, but not yet occupied by other brands.
The Opportunity and Challenge of Entering the Indian Market
India is a market with 1.3 billion population, rapid economic development, government support for new energy vehicle development, but very low electric vehicle penetration rate and almost no competitors. This is a perfect opportunity, but also a huge challenge. Tesla decided to establish new factories and sales networks in India, thus diverting the attention and resources of its competitors in the Chinese market, while expanding new markets.
But this decision was not easy to implement. Tesla encountered many difficulties and resistance, including local laws, taxes, infrastructure, culture and other issues in India. For example, Tesla could not enjoy the production subsidies and tax incentives provided by the Indian government, because these policies only targeted domestic electric vehicles; Tesla had to pay high tariffs and value-added taxes when importing parts and vehicles in India; Tesla lacked sufficient charging facilities and service networks in India; Tesla encountered some legal disputes and safety issues in India. They also faced a lot of questions and criticisms. Some people thought they were giving up the Chinese market; some people thought they were risking investing in an immature market. But they did not give up; they persisted. They communicated and cooperated closely with the Indian government, winning their support and trust. They established good relationships with local partners and suppliers in India, reducing costs and risks. They conducted positive publicity and interaction with the Indian media and public, enhancing their brand awareness and reputation. They designed products and services suitable for local consumers according to the characteristics and needs of the Indian market, creating a unique value proposition. They overcame all difficulties and resistance, and finally achieved their goals in India.
The Success and Impact of Launching Model 3 in India
On January 8th 2021, Tesla registered Tesla India Motors and Energy Private Ltd in Bangalore. In February of the same year, Tesla announced that it would set up an electric vehicle manufacturing unit in Karnataka state in southern India. This is Tesla’s second factory in Asia and its sixth factory worldwide. Tesla plans to produce and sell its best-selling model — Model 3 — here. This is a high-performance, high-efficiency, high-intelligence,high-safety, and high-cost performance electric car, fully meeting the needs and expectations of Indian consumers. Tesla also plans to establish its own charging network in India, providing convenience and confidence for electric vehicle users.
Tesla Model 3 has caused a huge response and craze in the Indian market, and soon dominated the electric vehicle market. It is predicted that the starting price of Tesla Model 3 in India will be 6 million rupees, which is much lower than the prices in other countries, and also much cheaper than other luxury cars in the Indian market. The sales and profits of Tesla Model 3 exceeded Tesla’s expectations, and also contributed to the development of new energy vehicles in India.
Tesla’s success in India not only brought economic benefits to Tesla, but also brought strategic advantages to Tesla. Tesla demonstrated its strength and charm as the world’s leading electric car brand through its performance in the Indian market. Tesla also exerted indirect and effective pressure on the Chinese market through its influence in the Indian market. Tesla made Chinese local brands feel threatened and urgent, forcing them to divert their attention and resources to cope with Tesla’s challenge in the Indian market. Tesla also made the Chinese government feel embarrassed and uneasy, prompting them to reconsider their attitude and policy towards Tesla in the Chinese market. Tesla used a strategy of encircling Wei to rescue Zhao, achieving a win-win situation.
This is the story we heard from Tesla’s senior strategic officer about Tesla’s establishment of new factories and sales networks in India. This is a story full of challenges and opportunities, and also a story that shows Tesla’s innovation and disruption. This is a story worth learning from and drawing on.
