elon Musk: Tesla suspends India’s entry plan after tariffs stall: Sources

Tesla Inc suspended plans to sell electric cars in India, ditched the search for showroom space, and reassigned part of its national team after failing to secure lower import taxes, three people told Reuters who have familiar with the matter.

The decision ends more than a year of stalled talks with government representatives as Tesla sought to test demand first by selling imported electric vehicles (EVs) from manufacturing centers in the United States and China, at lower rates.

But the Indian government is pushing Tesla to engage in local manufacturing before lowering tariffs, which can go up to 100% on imported vehicles.

Tesla had set a deadline for February 1, the day India unveils its budget and announces tax changes, to see if its lobbying led to an outcome, sources told Reuters. knowledge of the company’s plan.

When Prime Minister Narendra Modi’s government did not offer a concession, Tesla suspended plans to import cars to India, the sources added, who asked for anonymity because the deliberations were private.

For months, Tesla has been looking for real estate options to open showrooms and service centers in major Indian cities of New Delhi, Mumbai and Bengaluru, but even that plan is now on hold, two of the sources said.

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Tesla did not respond to an email seeking comment.

An Indian government spokesman did not immediately respond to a request for comment.

Tesla has assigned additional responsibilities for other markets to some of its small teams in India. Its Indian political executive Manuj Khurana has taken on an additional “product” role in San Francisco since March, his LinkedIn profile shows.

Not more than January, CEO Elon Musk he said Tesla “was still facing many challenges with the government” regarding sales in India.

But strong demand for Tesla vehicles elsewhere and the impasse on import taxes have prompted a change of strategy, the sources say.

Modi tried to lure manufacturers with a “Make in India” campaign, but his transport minister, Nitin Gadkari, said in April that it would not be a “good proposition” for Tesla to import cars from China to India.

But New Delhi had clinched a victory in January when German carmaker Mercedes-Benz said it would begin assembling one of its electric cars in India.

Tesla had been trying to gain a head start in India’s small but growing electric vehicle market, now dominated by domestic automakers

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Tesla’s minimum price of $ 40,000 would place it in the luxury segment of the Indian market, where sales make up only a small fraction of annual vehicle sales of around 3 million.

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