Tesla Motors has time and again expressed its interest in setting up a base in India but India’s high import duties were hindrance in its plan. It has been planning to enter the Indian market since 2019, even expected to begin its operations in early 2021.
Tesla had incorporated its company on the 8th of January 2021 for the same purpose and registered itself as Tesla India Motors and Energy in Bangalore indicating their intention to start the sale of their cars in India.
The registered company has 3 directors Vaibhav Taneja, Venkatrangam Sreeram and David Feinstein. Vaibhav Taneja is Tesla’s Chief Accounting Officer whereas David Feinstein is the Senior Director of Global trade and new markets at Tesla.
Main Hurdle Faced By Tesla
However, the high import duty has been the biggest hurdle faced by Tesla. According to Indian tax slabs, an electric vehicle that costs under $40,000 attracts a 60% import tax. The tax goes up to 100% once the price crosses the $40,000 mark. The cheapest Tesla was priced at around $45,000 which is Rs 37 lakh. Tesla argued that a 100 percent import duty would make their cars too expensive and take away their key selling point of affordability. It also tried demanding that the government slash the duty down 40 percent.
Plans Abandoned in 2021
Tesla then abandoned plans to move in 2021 after failing to get special incentives from the government for importing their EVs at lower duty. The government has always been firm on its demand that Tesla should manufacture cars locally instead of importing them from other locations. The Indian government has been adamant about building a facility so as to support the Make in India initiative. Tesla stopped pressing the government for lowering the import duty and finally gave in to the government’s demand and agreed to set up a base along with assembling units throughout the country.
Elon Musk Meeting with Narendra Modi
PM meeting Mr. Elon Musk in New York, USA on June 20, 2023. Tesla has engaged in many talks over the years with the Indian Government about the reduction of the import duties and how the current duty structure would make Tesla cars unaffordable but the talks have ended in deadlocks quite a few times. Recently, there was also a meeting held between Elon Musk and Prime Minister Narendra Modi in June 2023 in New York. Elon Musk wherein agreed on building an electric vehicle plant and entering the Indian EV market “as soon as humanly possible.” Tesla later fast tracked discussions with government officials on a potential plant investment, manufacturing of EV batteries, and their plan on building a new low-cost $24,000 EV for the Indian market.
Affordable EVs for India
Tesla’s arrival in India could give India’s EV segment a major boost. It would be able to significantly leverage the advantage of reduced labor costs & locally sourced materials by establishing a Gigafactory in India, also making the manufacturing of a $24,000 EV an achievable reality. The elimination of hefty import taxes and shipping costs will allow Tesla to substantially offer the lowest priced EV at Rs.20 lakh in the Indian market. Tata Motors currently holds 80% lion’s share in the Indian EV market, with others also having a significant share in the segment. This move by Tesla towards affordability would affect the Indian automakers and force them to change their strategies.
Tesla Office Leased in Pune
After meeting up with Indian government officials to discuss its foray into the nation, the company’s Indian arm, Tesla India Motor & Energy recently also leased an office for 5 years in Pune. It is spread over 5,850 sq ft in Panchshil Business Park in Pune’s Viman Nagar locality. Tesla’s leasing of office space is a clear signal of its future plan to engage in the Indian market. So now all things going in the pipeline, so we can hope now Tesla will come soon, from silicon valley to Indian streets. stay connected for the more Tesla updates
