After failing to achieve reduced import duties, Tesla Inc has put plans to sell electric vehicles in India on hold, abandoned a search for showroom space, and transferred members of its domestic staff, according to three individuals familiar with the situation.
Tesla planned to initially test demand by selling electric cars (EVs) imported from production hubs in the United States and China at reduced tariffs, which resulted in a year of stalled discussions with government authorities.
However, the Indian government is pressuring Tesla to commit to local manufacture before it lowers import duties, which may be as high as 100%.
Tesla had set a deadline of Feb. 1, the day India releases its budget and reveals tax adjustments, to determine if its lobbying efforts were successful, according to individuals familiar with the company’s strategy.
Tesla put its intentions to import cars into India on hold after Prime Minister c’s administration refused to make a compromise, according to the people, who requested anonymity because the discussions were private.
Tesla has 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 people.
Some of Tesla’s tiny 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 page.
Tesla CEO Elon Musk stated 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 automobiles overseas and a conflict over import tariffs, according to the sources.
Modi has tried to entice businesses with a “Make in India” push, but his transport minister, Nitin Gadkari, stated in April that Tesla importing vehicles from China would not be a “good proposal.”
However, in January, New Delhi gained a victory when Mercedes-Benz announced that it will begin building one of its electric cars in India.
Tesla had hoped to get a head start in India’s modest but rising electric car industry, which is now dominated by Tata Motors.
Tesla’s minimum price of $40,000 would place it in the premium category of the Indian market, where sales account for a small percentage of the country’s yearly car sales of approximately 3 million.