Teslas India plans do not include the production of electric vehicle, according to the local minister of industrial minister, and the reason is quite simple.
Tesla has been trying to enter the Indian car market for years, but it has not been able to bypass the country’s protectionist efforts that include high import duties on foreign vehicles.
There have been several fake starts in the country. CEO Elon Musk has stated on several occasions that Tesla is actively trying to enter the market.
For the past five years, it seemed that the US car manufacturer was on the verge of entering the Indian market with local hires and even vehicle validation, but it was never realized.
Over the past few months, a new initiative has been underway and it has shown a promise.
It came after India finally reached a compromise with its import tasks on cars last year and opened the door for Tesla and other EV car manufacturers to launch in the country.
The trade involves significantly reducing import tasks for a limited number of electric vehicles, provided that the car manufacturer makes a significant investment and obligation to establish an electric vehicle factory in India in the coming years.
Since then, Tesla has begun to hire service and sales staff, and there have been several reports that the car manufacturer is closing for some retail and service seats.
However, we are now learning that Tesla does not plan to take advantage of the agreement, which includes the establishment of local vehicle production.
HD Kumaraswamy, India’s Ministry of Heavy Industries, announced that Tesla will not be one of the car manufacturers planning to build EV -factories in the country (via BBC):
“Mercedes Benz, Skoda-Volkswagen, Hyundai and Kia have shown interest [in manufacturing electric cars in India]. Tesla – We don’t expect from them. “
Another Indian government official added that while Tesla participated in the first round of discussions with stakeholders, it stopped participating in the process after while the carmakers mentioned previously mentioned.
Kumaraswamy still said he thinks Tesla is planning to open “two showrooms” in the country, but it is not clear how it plans to deal with the situation with import duties.
Tesla was also facing yet another recent setback in India when it lost the head of the country last month.
Electek Tag
I said it several times in the last few months in the middle of Tesla’s latest efforts to enter India, but I repeat it: I will believe it when I see it.
We have been burned too many times on this.
Showrooms are one thing, but Tesla also has to implement service and charging stations. If its vehicles are still subject to steep import duties without the benefits of the promise of a production investment, it will be a tough market for Tesla.
The primary reason why Tesla does not commit to a production facility in India is probably due to its factories that are currently operating with approx. 60% capacity.
It makes no sense to invest in more production capacity if you do not already use your current fully implemented capacity. That’s also why Tesla stopped his Gigafactory Mexico project with the US tariffs.
Tesla currently has a demand problem. Not a demand for production capacity.
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