Tesla Inc. is an American multinational automotive and sustainable energy company that has yet to set a date for its entry into India, but it will start its first phase of operations here with direct imports from its German Gigafactory.
According to reliable sources, Indian government representatives have discouraged the Elon Musk-led business from importing vehicles from its gigafactory in Shanghai.
“Due to geopolitical tensions between India and China, the top management at Tesla has been categorically told by the ministries not to import any car from the world’s largest EV market. Moreover, Indo-German ties on multiple disciplines have been linked earlier, and the US EV maker is encouraged to leverage the same,” said assertions.
“The ministries have firmly instructed the top management at Tesla not to import any cars from the largest electric vehicle market in the world due to geopolitical tensions between China and India.” Furthermore, the US EV manufacturer is urged to take advantage of the earlier agreements on Indo-German ties across several disciplines.
Another anonymous source said that Tesla is requesting a reduction in customs duties on the import of fully assembled (CBU) electric vehicles from Germany. The source also mentioned that the government is open to the idea because many high-end automakers, including Mercedes, BMW, Audi, and others, are headquartered in Germany.
Tesla was requesting exemptions from import duties on foreign-made electric vehicles. Thus, the source added that Completely Built (CBU) vehicles imported from Germany could be reduced by 20–30%, benefiting not just Tesla but also other German luxury automakers like Mercedes, BMW, Audi, and so forth.
However, CNBC-TV18 claimed, citing sources, that no decision has been made in this regard and that suggestions that the government is considering a customs duty concession for Tesla are speculative.
Import cars (of all powertrains) with a Cost, Insurance, and Freight (CIF) value of more than US$ 40,000 are subject to a 100% customs duty in India. Sixty percent import duty is imposed on buyers of cars with a CIF under $40,000.
According to Investopedia, cost, Insurance, and Freight (CIF) is an international shipping agreement that specifies the fees a seller must pay to cover the expenses, insurance, and freight of a buyer’s purchase while it is in transit.
“Though Tesla plans to produce its most affordable vehicle at its German facility, it anticipates that the Indian market would purchase significant quantities of this model. One of the people previously quoted told Moneycontrol that the automobile, which is yet unidentified and costs Rs 20 lakh, will be significantly indigenized in India after first being completely knocked down (CKD) using German kits.
Additionally, luxury electric SUVs are becoming increasingly popular in India and Europe. Therefore, according to a second source, it would be wiser to introduce the Model Y in India rather than the Model 3 sedan constructed in China and the US.
At an ACMA summit, Union Commerce Minister Piyush Goyal stated that Tesla Inc. plans to purchase vehicle components worth $1.7–1.9 billion this year. He also said that in 2022, imported car components will almost triple from $1 billion in supplied parts.
Puneet Gupta, director of S&P Global Mobility’s India and ASEAN Automotive Sales Forecast, is adamant that Tesla’s arrival in India will benefit both the country and the business.
“India, the third-largest volume player globally, offers Tesla the ideal platform to increase its volume. India is actively seeking more environmentally friendly automobiles, and when electric vehicles with cutting-edge technology are introduced there, hybrid cars will also start to become extinct.
“Consumers’ inclination towards electric vehicles will go up drastically once they get first-hand experience with world-class EV technology,” the speaker continued.
Like iPhones built in India, Avik Chattopadhyay, a veteran of the auto business and Co-Founder of brand strategy and solutions consultancy Expereal, believes that manufacturing a Tesla in India won’t be as revolutionary and mind-blowing as it is being made up to be.
India’s automobile industry will become electrified after some time. These are useful for PPTs that we manufacture at Tesla in India and are optical. We’re talking about an electric car that costs more than Rs. 20 lakhs, even at $30k; therefore, at most, you shouldn’t expect to sell more than $2,000,000,000 in a year. As a nation, we suffer from an inferiority complex and a general lack of confidence, as evidenced by our obsession with a Tesla arriving in India. In contrast, Vietnam takes excellent delight in selling a Vinfast in Tesla’s home nation, “explained Chattopadhyay.
