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Tesla Ghosts India: No Contact, No Investment

Tesla dumps India

After making the Indian government change the import taxes on electric vehicles, the American electric vehicle maker Tesla Inc. has seemingly abandoned its plans to invest in India. According to sources familiar with the situation, Elon Musk’s team has ceased all communication with Indian officials. This has resulted in experts speculating that the anticipated entry of the EV leader into India has been dropped. This sudden halt also comes after Musk postponed a planned visit to India in late April. He was set to meet with Prime Minister Narendra Modi.

Tesla Ghosts India: No Contact, No Investment

Why is Tesla not coming to India?

At this point, Tesla’s silence has left Indian officials puzzled and disappointed. We have been observing numerous reports over the last few years in which Tesla had been in talks with the Indian government. However, after getting the government to introduce a new EV policy, it has suddenly stopped all inquiries after Musk canceled his trip.

As per the reports, the primary reason for this abrupt change is Tesla’s current financial challenges. It has been reported that the American EV automaker is grappling with capital issues. Hence, it is making it reluctant to commit to new investments in India at this time.

Tesla Ghosts India: No Contact, No Investment
Tesla CEO Elon Musk

Tesla’s hesitation also comes due to the financial strain and increasing global competition. The company recently reported its second consecutive drop in quarterly deliveries.

This has highlighted the difficulties it faces in maintaining its growth momentum. Additionally, Tesla is facing fierce competition in China. For those who may not be aware, currently, China is one of its largest markets for the brand.

Tesla Ghosts India: No Contact, No Investment

Over the last few years, it has been witnessing a surge in local competitors. One of the biggest threats to Tesla’s business has come from BYD, the Chinese EV automaker which also recently launched the Seal EV sedan in India.

Tesla firing employees as well

Tesla Ghosts India: No Contact, No Investment

It was reported back in April of this year that Elon Musk announced significant staff reductions. This has also intensified the company’s attempts to manage its resources more cautiously. The much-anticipated Cybertruck has been facing production delays as well. The company at the moment has also delayed the construction of a new plant in Mexico.

India’s EV Market

India, with its growing demand for automobiles, represents a significant opportunity for EV manufacturers. However, the country’s EV market is still in its infancy. Presently, battery-powered vehicles accounted for only 1.3% of total car sales last year. High upfront costs and a lack of charging infrastructure are major deterrents for potential buyers.

Tesla Ghosts India: No Contact, No Investment

So, in an effort to attract foreign EV makers, India recently lowered import taxes for those willing to invest at least Rs 4,150 crore (approximately $497 million). The government wants these automakers to start local production within three years. Musk’s visit to India was initially scheduled shortly after this policy change. However, that meeting was canceled.

Domestic Players Take the Lead

Many experts have noted that despite Tesla stepping back, the Indian government is now shifting its focus to domestic automakers to drive the EV transition. Companies like Tata Motors Ltd. and Mahindra & Mahindra Ltd. are expected to spearhead the push for greater EV adoption in the country.

Tesla Ghosts India: No Contact, No Investment
XUV400 Pro

These homegrown automakers have already made significant advancements in the EV sector, and they are likely to benefit from the government’s support. Currently, Tata Motors and Mahindra have announced big plans with their new EVs in the pipeline. Additionally, Maruti Suzuki is also gearing up for the launch of the eVX electric SUV in the country.

Could Tesla still enter India?

Tesla Ghosts India: No Contact, No Investment

Despite the current situation, Indian officials have indicated that Tesla would still be welcomed under the new import tax policy, but that is if it decides to re-engage in conversation with the Indian officials for a formal entry. Presently, the government remains hopeful that the global EV leader might reconsider its stance once its financial situation stabilizes and operational issues are resolved.

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