After The Musk-Modi Show, Tesla May Finally Enter India¡¯s $151 Billion Auto Sector Soon
Its been nine months since India¡¯s PM Modi met his ¡®fan¡¯ Elon Musk in June last year, after which it was being anticipated that Tesla will soon make its much awaited entry into India.
After Musk-Modi Show, Tesla May Finally Enter India Soon
Now, it seems that new tax cuts from India¡¯s side could be that key which Tesla and its EV competitors need to unlock the world¡¯s third-largest auto market¡ªbut only if the government backs off on limiting sales.
India has been imposing unreasonably high tariffs on imported foreign electric vehicles (EVs) for many years¡ªup to 100%. Accordingly, automobiles like the $38,990 Model 3 from Tesla that are sold in the United States would cost close to $80,000 in India. (Tesla currently doesn't sell any cars in India, primarily due to tariffs.)
Indian Govt Taking Steps Towards Enabling Tesla's Entry
However, the Ministry of Heavy Industries in India declared last Friday that it would be removing tariffs for foreign electric vehicle manufacturers who agree to establish production facilities in India. Automakers will only pay 15% tax on their cars if they invest a minimum of $500 million in manufacturing in India; if the car is sold for less than $35,000, taxes will be waived entirely.?
But, if foreign EV manufacturers choose to participate in the program, their annual sales are limited to 8,000 vehicles under the new regulations. Although Tesla has recently made headlines for its declining sales in China, in December of last year alone, the company sold nearly 100,000 cars there. For Tesla, selling 8,000 vehicles annually in India isn't much, but it is a step in the right direction if the Indian government decides to eventually lift the sales restrictions. And for Tesla, which declared late last year that it was prepared to dedicate up to $2 billion to Indian manufacturing, merely being granted permission to construct factories in India is a significant victory, as per Fortune report.
Although international corporations that are already operating in India are eligible for this policy, Tesla is commonly perceived as the company that the government wishes to establish a plant in India.
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When Elon Musk Met India's PM Modi
For some time now, Tesla has been wooing India: During their June meeting in New York, Elon Musk and Prime Minister Narendra Modi reportedly talked about a possible Tesla factory in India. After their meeting, Elon?Musk declared that he was a "fan" of Modi and that he was "incredibly excited about the future of India," noting that it held "more promise than any large country in the world."??
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India's $151 Billion Auto Sector Market
Not only is India's automobile market enormous, but it is also largely unexplored for foreign automakers like Tesla.?With a $151 billion auto market, India ranks third globally. This information comes from the Ministry of Heavy Industries in India. However, the cycle of EV adoption is still very early: According to a 2021 BCG report, personal vehicles like scooters accounted for nearly half of the market share, with EVs making up less than 1% of the total. There's room for enormous growth: according to BCG estimates, by 2030 EV sales could account for up to 35% of total vehicle sales.?
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