Musk tweeted from his X account that he is “looking forward to meeting Prime Minister Modi in India.”
Talks of Tesla’s entry into the Indian market began in 2021. At that time, the Indian government announced that if Tesla were to produce vehicles in India, it would support it in producing at lower costs than in China. Tesla registered its Indian subsidiary “Tesla India Motors and Energy” in January of the same year and planned to enter the Indian market in 2021. However, due to disagreements over import tariffs in 2022, Tesla decided to put its plans to enter the Indian market on hold.
In 2022, Indian media outlet BenarNews reported that Elon Musk had agreed to build a factory in central Java’s industrial zone after meeting with Indonesian President Joko Widodo.
In March 2023, investors speculated that Tesla would produce a low-cost electric car, priced at $25,000, in India. In June of the same year, Musk confirmed plans to expand to India after a meeting with Prime Minister Modi, who was visiting the United States.
However, Bloomberg, quoting an Indian government official, reported in December, “There is currently no proposal to exempt local value-added costs or provide subsidies on import duties for electric cars.” The Indian government’s announcement that negotiations on import duties for electric vehicles were impossible made Tesla’s entry into the Indian market uncertain again.
Musk has previously preferred importing and selling cars in India over local production, requesting a tariff reduction.
In March, the Indian government announced a policy to partially reduce tariffs for electric car manufacturers that meet certain conditions, including an investment of more than $500 million.
If Musk’s visit to India at the end of this month results in the announcement of a Tesla factory, it would benefit the Modi administration, which has been attracting foreign investment through the Made in India policy to promote manufacturing.
In 2022, India’s new car sales ranked third in the world, surpassing Japan and following China and the United States. The market is expected to continue to expand due to the growth of the middle class. Electric cars make up about 2% of car sales, which is expected to increase.
Maruti Suzuki holds 40% of the Indian passenger car market, while Tata Motors has 70% of the electric car market.
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