Tesla CEO Elon Musk said on Friday that Tesla will only build a factory in India after it is allowed to sell and service cars in India. On Friday, a fan asked on Twitter for an update on Tesla’s plant in India, and Musk responded: “Tesla will only consider building a manufacturing plant in India if it is first allowed to sell and service cars.”
For more than two years, Tesla and the Indian government have been in talks to enter the Indian market. On the one hand, the Indian government insists that Tesla first build a factory in the country in order to assemble cars locally. If Tesla just wanted to sell cars in the Indian market, it would have to pay high import taxes.
Currently, India imposes a 100% import tax on imported cars with a cost, insurance and freight (CIF) value of more than $40,000 and a 60% import tax on cars with a CIF value below that amount. Meanwhile, the Indian government has refused to offer Tesla any tax rebates.
The Indian government is concerned about giving Tesla any tax breaks, as the move could discourage other automakers that abide by the current tax system. In addition, the tax rebate could hit India’s domestic EV industry hard.
Tesla, on the other hand, is lobbying hard for India to lower tariffs so it can test the market reaction by selling cheaper imported electric cars before committing to a manufacturing base.
Although the stance of the central government of India has always been tough, many states have extended olive branches to Musk before. In January, ministers from the Indian states of Telangana, Punjab, Bengal and Maharashtra invited him to invest in their respective states.
Tesla set up a subsidiary in India in early 2021 and registered an office in the city of Bangalore in the southern Indian state of Karnataka. Karnataka also confirmed shortly afterward that Tesla will build an electric vehicle manufacturing plant in the state. However, both programs are currently at a standstill.
“If Musk is ready to make Tesla cars in India, then there is no problem,” Nitin Gadkari, India’s road minister, said at an event last month. But he added, that making a car in China and selling it in India is not a “good proposition”.
Tesla 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
Several global car brands including Mercedes-Benz, BMW, Toyota and Hyundai have expanded their presence in India in recent years. In a tweet earlier this year, Musk said Tesla is “still working with the Indian government on many challenges.” Audi has expressed similar concerns.
Several Tesla executives in India have reportedly been reassigned recently to focus on Indonesia and other Asian markets. The survey shows that the utilization rate of electric vehicles (including two-wheel, three-wheel and four-wheel) in India is very low, and its overall penetration rate is only 0.8%, of which four-wheel electric vehicles account for 4% of the total sales of electric vehicles.
In another tweet, Musk revealed to Twitter followers that his rocket company SpaceX, which last year hired former PayPal executive Sanjay Bhargava, is awaiting approval from the Indian government to deploy the Starlink satellite internet service in the country. Sanjay Bhargava) to advance Starlink’s progress in India.
Bhargava said SpaceX briefly began taking reservations for Starlink services in India and plans to deploy 160,000 to 200,000 satellite dishes in India by the end of December 2022. But Indian regulators recently ordered SpaceX to stop taking orders from Indian users because it has not yet obtained a license to operate in the country. Soon after, Bhargava also announced his resignation.