Tax Concessions Denied, Tesla India Launch May Not Happen

The American firm’s EVs were already spotted on test in the country and seven models were homologated as well

• Tesla requested the Centre to reduce the duty on fully imported EVs from 100 per cent to 40 per cent.

• The Indian government insisted Tesla localise production before seeking incentives. 

• The Union Road Transport Minister stated that Tesla importing EVs from China would not be a good proposition.

• With the current tariffs, the Model 3 would cost around Rs 60 lakh should it be launched. 

The arrival of Tesla EVs in India seems to have been further delayed, as a recent report states that the company has put its local plans on hold, indefinitely. The American firm seems to have taken the decision after much deliberation about reduction of duty on fully imported electric cars with the Centre yielded no favourable results.

It all started in late 2020, when Nitin Gadkari, Union Minister of Road Transport and Highways, confirmed that Tesla is planning to commence its India operations in 2021. The American carmaker registered its office in Bengaluru and also homologated seven models here. 

In the following months, the Model 3 and Model Y were spotted road-testing multiple times and this is when Tesla approached the Indian government seeking a reduction on the import duty levied on fully imported EVs, to bring down the prices of its products to make them more attainable.

The import duty on completely built-up units (CBU) stands at 100 per cent (value of the car), which Tesla wanted to be at around 40 per cent. It wanted to test the market’s response to its electric cars before making significant investments into its Indian operations. However, the government rejected the request and insisted the company localise production. 

The Model 3 was expected to be the first Tesla to be launched here as a CBU offering. While its current USA prices start from the equivalent of around Rs 36.4 lakh, the import tariffs levied by the Indian government would mean it would cost over Rs 60 lakh here.

Interestingly, Nitin Gadkari had made a claim that Tesla’s cars would start from Rs 35 lakh, but there wasn’t any confirmation from the carmaker about the same. In April 2022, Gadkari went on to comment that it would not be a good proposition for Tesla to import vehicles made in China, the brand’s nearest manufacturing hub.

As of now, it seems unlikely that Tesla will start selling its EVs in India anytime soon. It is also unlikely for the government to change its stance on tariff reduction, which would continue to make purchasing imported EVs a pricey affair.

Unlike Tesla, Mercedes-Benz has made it clear that it will be locally manufacturing its EV, specifically the EQS luxury sedan. In the meantime, Tata continues to dominate the EV space in India with its mass market offerings. Hyundai and MG are also pushing EV adoption in the country, but their products are comparatively premium.

Source