Tesla to hold India entry plan

After failing to achieve reduced import duties, Tesla has put plans to sell electric cars in India on hold, abandoned a search for showroom space, and transferred some of its domestic team, according to three people familiar with the situation.

Tesla planned to first test demand by selling electric vehicles (EVs) imported from production hubs in the US and China at reduced tariffs, which resulted in a year of stalemate talks with government representatives.

However, the Indian government is pressuring Tesla to commit to local manufacture before it lowers import duties, which can be as high as 100%.

Tesla had set a deadline of February 1 to determine if it’s lobbying paid off, the day India releases its budget and reveals tax adjustments, according to sources familiar with the company’s strategy.

Tesla put its intentions to import cars into India on hold after Prime Minister Narendra Modi’s government refused to make a compromise, according to the people, who requested anonymity because the discussions were private.

Tesla had been looking for real estate alternatives in the main Indian cities of New Delhi, Mumbai, and Bengaluru for months, but that plan has also been put on hold, according to two sources.

Tesla did not respond to a request for comment sent via email. A request for response from the Indian government was not immediately returned.

Some of Tesla’s small crew in India has been given extra tasks for other markets.

Manuj Khurana, the company’s India policy leader, has been working in a new “product” capacity in San Francisco since March, according to his LinkedIn profile.

Tesla CEO Elon Musk said in January that the company was “still working through a lot of problems with the government” in terms of sales in India.

The shift in tactics was triggered by increased demand for Tesla vehicles overseas and a conflict over import tariffs.

Modi has tried to entice manufacturers with a “Make in India” push, but his transport minister, Nitin Gadkari, stated in April that Tesla importing cars from China would not be a “good proposal.”

However, in January, New Delhi gained a victory when Mercedes-Benz announced that it would begin building one of its electric cars in India.

Tesla had hoped to get a head start in India’s modest but rising electric vehicle market, which is now dominated by Tata Motors.

Tesla’s minimum price of $40,000 (approximately Rs. 31 lakh) would place it in the luxury category of the Indian market, where sales account for a small percentage of the country’s annual car sales of nearly 3 million.