Tesla’s move into India is currently on hold, Reuters reports, adding that Tesla has abandoned a search for a showroom space while reassigning some of its domestic team. This, according to three anonymous sources, is after Tesla failed to secure lower import taxes in India. I’m sure that Tesla owners and supporters in India may find the news disheartening, but Tesla’s stance on lower tariffs would make its EVs more affordable for consumers.
Tesla Entrance Into India Paused
The sources told Reuters that Tesla set a deadline of February 1, which was the day India unveiled its budget and announced tax changes, to see if India would lower the tariffs. When the Indian government didn’t, Tesla put its plans to import EVs into India on hold.
Two of the sources confirmed that Tesla’s plans to open showrooms and services centers are now on hold, while the government of India wants Tesla to commit to manufacturing locally before lowering the tariffs.
Last year, plans were announced for Tesla to build an EV manufacturing plant in India. In April 2021, India’s Union Minister, Nitin Gadkari, gave a statement saying that India would support Tesla if it chose to manufacture EVs there.
“I will suggest them [Tesla] that it will be golden opportunity for them to start manufacturing facility in India because as the automobile components are concerned, already Tesla is taking a lot of components from the Indian manufacturers. So there will be availability.
“If they manufacture here in India, we will support them.
“They can export a lot of vehicles from India, and as compared with the other countries, it will be economically viable.”
The Gujarat government even offered Tesla 1,000 acres of land to set up a plant in India. Although that does seem rather generous, the question has to be asked: would Tesla succeed in India if the government was to fail at keeping its word on lowering the tariffs?
Tesla would probably sell EVs in India, but not at the level it would do so if the Indian government was to work with Tesla to make them more affordable to consumers.
The article added that Tesla’s minimum price tag of $40,000 would put it in the luxury segment of India’s market where sales only make up a small portion of the annual vehicle sales, which are around 3 million.
Reuters noted that for some of Tesla’s small teams in India, the company has assigned additional responsibilities for other markets. Tesla CEO Elon Musk spoke about these challenges, noting that the company was still trying to work through them with the Indian government. However, the two sources told Reuters that the strong demand for Tesla’s EVs combined with the standoff over import taxes is what inspired Tesla’s shift in strategy.
Importing EVs From China Isn’t Encouraged
Just last month, Gadkari emphasized that India did not want Tesla to import its EVs from Giga Shanghai. During a government conference, he said, “Making in China and selling here is not a good proposition.”
With China being closer to India than any of the American factories or Giga Berlin, it would make sense for Tesla to import EVs from Giga Shanghai, which Tesla is transforming into the largest export hub on the planet. In a letter from Tesla to Shanghai authorities thanking them for aid with reopening after the Covid-19 shutdown, Tesla laid out its expansion plans, which include building a new factory on nearby land that will add an annual capacity of 450,000 cars.