Tesla To Manufacture Cars Locally In India, But There’s A Catch

At the start of the year, news of Tesla’s plans to enter India was doing the rounds. The hype may have somewhat subsided by now, but the American manufacturer is hoping to commence its India operations by the end of this year. Meanwhile, company boss Elon Musk has highlighted some issues on Twitter. Let’s take a look:

Tesla’s Initial India Plans

Tesla will initially bring its electric vehicles to India as completely built units (CBU) but they won’t come cheap. Musk says import duties in India are one of the highest in the world and that’s actually true. 

Musk is also of the opinion that battery vehicles are largely treated the same as petrol and diesel vehicles. So while the government is offering subsidies and incentives, they are only applicable to locally manufactured vehicles with a lower battery capacity, such as the Tata Nexon EV. This means it won’t be easy for Tesla to price its cars competitively. 

The primary reason the government has increased import taxes is to promote local manufacturing, which brings us to the next point. 

Tesla’s Local Manufacturing Plans 

Tesla plans to set up a gigafactory in India to manufacture its cars, however, there’s a catch and a big one. Musk says Tesla will consider local manufacturing only after it has tasted success with imported models. And to do that, the cars need to be priced competitively. This takes us back to square one -- higher import taxes. 

Musk feels temporary tax reduction would go a long way in helping Tesla achieve success in India. Reports suggest Tesla has even written to the Centre requesting them to lower taxes for completely built electric cars. But we believe that will affect the government’s plans of promoting local manufacturing, which was the main reason for shooting up taxes in the first place. Therefore, the chances of that happening are rather bleak. 

Sure, Tesla is a renowned brand name and that might help it establish its base in India but it only makes sense to test the waters before taking a plunge and setting up a factory. 

The Result?

Well, Tesla will set foot in India, but its cars won’t be cheap, at least initially. The Model 3, likely to be Tesla’s debut vehicle in India, has been spotted testing on our roads. With features such as auto pilot and a decent driving range, the Model 3, with an expected price of Rs 60 lakh (ex-showroom), will be one of the most technologically advanced cars.