I’m fighting for a dance metaphor to describe Tesla’s entry into India – first I thought of a waltz, a step forward, two steps back, and a side step. Then, I thought, maybe a slow dance because of the time it took. One thing is certain, this is not a polka.

India is known for its tech-savvy middle class, so Tesla and India seem like a perfect match. But apparently the obstacles are huge and take a long time to move.

As the second largest country in the world (after China) with 1.4 billion people and the fifth largest car market in the world, one would expect Tesla to want to import and sell cars, or even build. a gigantic factory. But the situation is not as simple as one might expect.

Before building a gigafactory, Tesla would like to test the level of demand by importing cars for sale. However, India’s import tariffs are prohibitive. Cars imported into India are currently taxed at 60% for vehicles costing less than $ 40,000, or 100% for vehicles priced over $ 40,000.

Tesla, meanwhile, has been pushing for a 40% reduction in tariffs for electric vehicles. These tariffs protect India’s own auto manufacturing industries. Tesla is negotiating to have those tariffs reduced, and several prominent politicians are trying to help.

India believes it can make Tesla cheaper than China, and Tesla has a huge fan base. To be able to sell cars competitively, Tesla has to build them in the country; before committing a huge amount of funds to a project, this dear Tesla wants to test the demand.

It’s not just chicken and egg, it’s more like a high-stakes tax duel and this discussion dates back to 2015. Long-term tax duel.

Each new announcement of progress is greeted with enthusiasm but then it seems to fade away. The ministers are considering tariff reductions, tariff reductions refused. A state offers to host a factory – mentioned in a tweet – the tweet is deleted.

What is definitely going on? India wants Tesla to come. Tesla wants to get involved. It just seems like there is a maze of obstacles. The Model 3 does not support roads and must be elevated.

But the air begins to clear; Tesla formed an Indian subsidiary. Tesla hired executives. Tesla is looking for local parts suppliers. Tesla cars are tested in the country (the Model 3’s low clearance was an issue).

Tesla CEO Elon Musk said on Twitter last month that a local factory in India was “very likely” if the company was successful in importing vehicles, but taxes on them are high.

Even so, the government is in favor of a cut if it can see companies like Tesla bring some benefit to the national economy – manufacture locally, for example, or give a firm timeline on when it will be able to. to do so, one of the officials mentioned.

It will be interesting to see who blinks first.

David Waterworth is a retired researcher and writer, a teacher who divides his time between caring for his grandchildren and trying to make sure they have a planet to live on. He owns 50 Tesla shares.


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