Tesla is gearing up to begin sales in India, and the company wrote a letter to ministries and government agency NITI Aayog. According to Tesla, the federal taxes on imports of fully assembled electric cars need to be reduced by 40 percent.
Tesla is planning to set up a factory in India, provided it garners success with imported vehicles, the company’s chief executive Elon Musk wrote on Twitter. Before this tweet, the company urged Indian ministries to reduce import duties on electric vehicles. This piece of information comes from two sources familiar with the matter.
— Madan Gowri (@madan3) July 23, 2021
Tesla’s pitch to reduce duties could face resistance from the administration of India’s Prime Minister Narendra Modi. The administration has vigorously supported high import taxes for several industries to encourage local manufacturing.
“We want to do so, but import duties are the highest in the world by far of any large country,” Musk pointed out while replying to a tweet about launching Tesla cars in India. “But we are hopeful that there will be at least a temporary tariff relief for electric vehicles,” he added.
The current rate for cars priced below $40,000 is 60 percent, and 100 percent for those above $40,000. “The argument is that at 40% import duty, electric cars can become more affordable but the threshold is still high enough to compel companies to manufacture locally if demand picks up,” one source said.
The Model 3 Standard Range Plus is the only Tesla car with a $40,000 price tag, according to the company’s U.S. website. When it comes to premium EVs, the Indian market is still in its infancy. Vehicles are usually steeply priced, and there is a lack of charging infrastructure.
Carmakers sold 2.4 million cars in the country last year. Just 5,000 of those cars were electric and most were priced at $28,000, according to NDTV. Tesla’s plan to begin sales in India does not depend on a change in government policy,