Tesla reportedly set a deadline of February 1, 2022, the day India revealed its budget and announced tax changes, to see if its lobbying has yielded any results.
Tesla Inc. has halted plans to sell electric cars in India, gave up its search for showroom space and reassigned some of its domestic team after failing to secure lower import taxes, in this case Three people familiar with the news told Reuters.
The decision follows more than a year of standoff with government representatives as Tesla sought to first test demand by selling imported electric vehicles (EVs) from production centers in the United States and China at lower tariffs.
But the Indian government is committing Tesla to manufacturing locally before reducing the tariffs, which could run up to 100%, on imported vehicles.
Tesla had set a deadline of February 1, the day India revealed its budget and announced tax changes, to see if its lobbying yielded results, sources familiar with the company’s plan told Reuters.
Tesla halted plans to import cars into India when Prime Minister Narendra Modi’s government did not offer a concession, said sources, who asked for anonymity because the deliberations were private.
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For months, Tesla had been exploring real estate options to open showrooms and service centers in major Indian cities of New Delhi, Mumbai and Bengaluru, but that plan too is now on hold, two sources said.
Tesla did not respond to an email seeking comment.
An Indian government spokesperson did not immediately respond to a request for comment.
Tesla has assigned additional responsibilities for other markets to some of its smaller team in India. Its India policy executive Manuj Khurana has held an additional “product” role in San Francisco since March, his LinkedIn profile shows.
As recently as January, Chief Executive Elon Musk said that Tesla “still faces a lot of challenges with the government” regarding sales in India.
But strong demand for Tesla’s vehicles elsewhere and the impasse over import taxes prompted a change in strategy, the sources said.
Modi has tried to woo manufacturers with a “Make in India” campaign, but his transport minister Nitin Gadkari said in April that it would not be a “good proposition” for Tesla to import cars from China into India.
But New Delhi won in January, when German luxury carmaker Mercedes-Benz said it would start assembling one of its electric cars in India.
Tesla had set February 1 as the date for the new budget announcement to see if its lobbying had any consequences.
Tesla had tried to gain an early lead in India’s small but growing market for electric vehicles, which is now dominated by domestic automaker Tata Motors.
Tesla’s minimum price tag of $40,000 will put it in the luxury segment of the Indian market, where sales are a tiny fraction of the annual vehicle sales of around 3 million.
(Reporting by Aditi Shah; Additional reporting by Aditya Kalra; Editing by Kevin Krolicki and Clarence Fernandez)
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