Can Elon Musk discover India?

On March 31, Elon Musk, founder and CEO of Tesla Motors, tweeted: “Adding several more countries to Model 3 order page tonight. Check for details, but will include India, Brazil, SA, SK, NZ, Sing & Ireland.” Later, he put up another tweet about a pan-India network of Supercharger stations, where Tesla’s electric vehicles can be recharged. Model 3 is not the only product Musk plans to bring to India. Last September, while giving Prime Minister Narendra Modi a guided tour of the Tesla factory, he had talked about bringing the Tesla Powerwall, a solar-powered, wall-mounted battery pack for homes that is powerful enough to take a house off-grid. But is that all?

If Musk were to take a close look at India, three sectors could capture his attention: energy storage, auto, and space. Infrastructure in these three sectors has developed to a reasonable level, skilled manpower is available, and there is a climate for entrepreneurship. Let’s take a closer look.

Manish Sharma, president and CEO of Panasonic India, says storage could be the game changer for India’s energy infrastructure, but cost remains a huge barrier. Tesla’s Powerwall, for instance, costs about four times that of traditional lead-acid batteries. “There is a huge demand for such devices but to achieve scale, the price of Powerwall needs to be cut drastically.” It’s a catch-22, because costs will come down only if the market expands.

In the U.S., Tesla has tied up with Panasonic to set up a $5 billion (Rs 31,585 crore) battery plant in Nevada. The plant, named Gigafactory, is expected to bring down the cost using economies of scale, innovative manufacturing, and waste reduction. In a tweet last October, Musk had said in India, given the high local demand, a Gigafactory would make sense in the long term.

Panasonic India has scored a first in battery-based power storage by setting up a 10 MW array at Panasonic’s factory in Jhajjar, Haryana, in collaboration with power generation and distribution company AES. The unit not only provides power back-up to the factory, but also helps ease the load on the grid at peak hours, ensuring stable power supply across the region.

At the household level, the government has ambitious plans, such as providing electricity to all by 2017 and round-the-clock power supply by 2019. This means electrification of another 400 million households and installing 160 GW capacity.

India, sunny for 250 to 300 days a year, has a solar energy potential of about 5,000 trillion kWh annually, says Rahul Walawalkar, president and managing director of power management company Customised Energy Solutions in a presentation to the industry association, India Energy Storage Alliance, on the relevance of Powerwall for microgrids and rooftop solar units.

About 10% of electrified villages in India get their power from off-grid solutions based on batteries, he adds.

Microgrids are the best way to electrify villages with less than 100 households or in places where grid supply can’t reach.

According to a report by renewables consultancy firm Bridge to India, the present rooftop solar power capacity is a paltry 525 MW. Compare that to the potential, which Sharma pegs at 6.5 GW, and the gap is evident.

According to a survey by the United States Agency for International Development and the Council on Energy, Environment and Water, as many as 250 companies in India are engaged in providing off-grid solutions. Clearly, there is a huge untapped market, where Tesla’s entry could make a big impact.

Batteries will be key to another segment that’s revving up for the future: electric vehicles. While Musk is seen as a visionary in this field, the Indian government, under its Rs 25.7 crore National Electric Mobility Mission Plan, is looking to put six million electric and hybrid vehicles on the streets by 2020.

India’s electric vehicles journey goes back to 2001, when Chetan Maini commercially launched the country’s first electric car, the Reva. He neither had the funding that Musk has, nor the global attention. As for the latter, Raja Gayam, CEO, Gayam Motor Works, a Hyderabad-based startup that makes e-rickshaws, says, “The buzz around Tesla coming to India helps as much as buzz can.”

Gayam Motors tied up with online grocer BigBasket in March to provide electric vehicles for deliveries in tier II cities. “We have started with public transport and will move to more sophisticated vehicles,” says Gayam. Another startup, Ather Energy, which raised $12 million from Tiger Global recently, is making electric scooters powered by a lithium-ion battery pack.

Gayam believes that the technological gap between developed and developing countries is narrowing and innovation in India’s electric vehicles sector can bring it up to global standards. He suggests two steps for the sector’s growth. First, the existing certification process, which was originally designed for conventional vehicles, should be aligned with the requirements of electric vehicles. Second, import barriers on lithium-ion batteries have to be brought down.

Besides energy storage and auto, Musk is also aiming to make space exploration and travel economical. Musk’s SpaceX landed a reusable rocket recently. Considering that a polar satellite launch vehicle costs between Rs 120 crore and Rs 140 crore, a reusable rocket can help make huge savings.

The Indian Space Research Organisation (ISRO) is expected to test its Reusable Launch Vehicle-Technology Demonstration (RLV-TD). in May or June. If successful, it will put the Indian space programme on a par with its global peers. ISRO has earned plaudits for Mangalyaan, the cheapest Mars mission ever, at a cost of Rs 450 crore or about Rs 4 per person in India. “For companies in India like L&T and Godrej [which are suppliers for ISRO] the opportunities [in the space sector] are getting better. The environment is slowly getting conducive for startups as well,” says Sanjay Nekkanti, co-founder, Dhruva Space. In 2012, he adds, there were Earth2Orbit and Team Indus started their journey. Since then, Earth2Orbit has launched a Japanese satellite and Team Indus has won part of the Google Lunar XPRIZE. So, the value chain is maturing. India has a skilled and cost-efficient human resource base in the space sector, thus the Indian space programmes are likely to continue to have a competitive edge.

The challenges in this sector are strategic in nature. “ISRO hasn’t had too many launch failures, so it has to be careful while giving contracts to a newbie. It has a reputation to maintain,” says Nekkanti.

Many years ago, the legendary Steve Jobs had found inspiration in India, but the country never figured in a big way in his entrepreneurial scheme of things. As much as India would like to be an important piece in Musk’s game, passing it up could end up being a costly oversight for a company that many say will leave Apple behind in sheer impact.