For the past few years, news of Tesla setting up shop in India has been continuously gathering steam. But Tesla CEO Elon Musk said that the U.S based EV company won't set up a manufacturing unit in any location unless it is allowed to sell and service cars first. In a response to a question asked by a Twitter user, Elon Musk tweeted, "Tesla will not put a manufacturing plant in any location where we are not allowed first to sell & service cars." Tesla is wary of the high import duty of 100 per cent that is levied on EVs that costs upwards of $40,000. The import duty on EVs costing less than $40,00 is 60 per cent.
undefinedTesla will not put a manufacturing plant in any location where we are not allowed first to sell & service cars
— Elon Musk (@elonmusk) May 27, 2022
Also Read: Tesla Building A Second Factory In Shanghai
It was in February 2022 that Tesla put its India plans on hold after multiple rounds of talks with the Indian government failed to bear fruit with regards to lowering tariffs on imports for testing the demand of Tesla cars in India by importing EVs from US or China, with China being the more economical option. But Union Minister Nitin Gadkari clearly said that manufacturing cars in China and selling them in India will not be a good proposition.
Tesla had set a deadline for entering India till the date of announcement of the new budget in February 2022 to see if its lobbying had any results.
The Indian government says that Tesla could set up a manufacturing facility in India in order to assemble cars locally and then sell it in Indian markets, with reduced import duty. Tesla did incorporate a subsidiary in India last year.
Also Read: Tesla Puts India Entry Plan On Hold
undefinedIf Tesla is able to succeed with imported vehicles, then a factory in India is quite likely.
— Elon Musk (@elonmusk) July 23, 2021
Now, automotive manufacturers can sell imported (completely built units or CBUs) in India in limited numbers without the need for homologation and that is a phenomenon which occurs commonly with manufacturers that are already present in India such as Mercedes-Benz, Audi, BMW and other luxury car companies. The catch is that since they already have a base in India, they are willing to pay high import duty, which Tesla is not, at this moment. In July 2021, he said that if Tesla has success with imported vehicles in India, then a factory is likely, but the import duties are one of the highest in the world.
For now, it would suffice to say that talks between Tesla and the Indian government are in stalemate and it can be a significant while before we actually see Tesla entering India in an official manner.
