What Elon Musk Has to Say about India on Tesla’s New Movement

In New Delhi, a momentous meeting took place between the renowned Elon Musk and the esteemed Prime Minister Narendra Modi during Modi's visit to the United States. Musk, expressing his admiration for Modi, conveyed his fervent desire to invest in India and bring the pioneering companies Tesla and Starlink to its shores at the earliest possible time. 

His eyes gleamed with excitement as he spoke of India's remarkable potential for a sustainable energy future, envisioning a landscape adorned with solar power, battery packs, and electric vehicles. Musk, brimming with enthusiasm, disclosed his plans to embark on a journey to India in the upcoming year.

Tesla, an innovative electric car manufacturer, has long harboured aspirations of venturing into the Indian market. However, various obstacles, such as exorbitant import taxes and the absence of incentives, have impeded its progress. 

On the other hand, Starlink, a satellite internet service under the umbrella of Musk's SpaceX venture, has engaged in negotiations with the Indian government, seeking authorization to operate within the country's boundaries.

What Did Elon Musk Say in the Meeting?

Elon Musk, the CEO of Tesla, shared a delightful recollection of Prime Minister Modi's visit to the Tesla factory in California back in 2015. Expressing boundless enthusiasm, Musk exclaimed his unwavering belief in the future of India, proclaiming that India holds more promise than any other large country in the world.

When questioned about the timeline for Tesla's arrival in India, Musk confidently asserted that Tesla would establish itself in the country as soon as humanly possible. He commended Prime Minister Modi's genuine concern for India's welfare, as he urged Tesla to make significant investments in the country—a request that resonated with Tesla's core values. Musk expressed his conviction that the challenge lies in determining the perfect moment to embark on this venture.

The Challenges Tesla Has to Face

Tesla Motors has been diligently planning to penetrate the Indian market since 2019, but the exorbitant import duty imposed on electric vehicles has proven to be a formidable obstacle. As per the current tax structure in India, electric vehicles valued below $40,000 are subjected to a hefty import tax of 60 per cent. The tax rate escalates to a staggering 100 per cent once the price exceeds the $40,000 threshold.

The most affordable Tesla model comes with a price tag of approximately $45,000 (around ₹ 37 lakh). The American automaker argues that a 100 per cent import duty would render their vehicles prohibitively expensive, compromising their fundamental selling point—affordability.

In response to a query on Twitter two years ago, Musk expressed his desire to launch Tesla in India but bemoaned the fact that "import duties are the highest in the world by far of any large country!"

The Centre's Stand The Narendra Modi government, ardently promoting the Make In India initiative, has proposed that Tesla consider manufacturing its vehicles within India. Earlier this year, Nitin Gadkari, the Minister of Road Transport and Highways, extended a warm welcome to Tesla, encouraging them to establish a manufacturing plant in the country. The minister emphasized that the carmaker would be eligible for subsidies and discounts, but only if the cars were manufactured in India, not imported from China.

It seems that Tesla intends to gauge the market by initially importing vehicles before establishing a local factory. Several state governments have reached out to Tesla, expressing their willingness to provide subsidies and exemptions to facilitate the establishment of a factory.

The divergence between Tesla's insistence on a reduction in import duties and the Indian government's push for domestic manufacturing under the Make In India campaign has impeded Tesla's entry into the Indian market.

Are Things Going Well in the Setup?

Last month, Musk revealed that Tesla would likely select a location for a new factory by the end of this year, as reported by Reuters. When asked by The Wall Street Journal about India's appeal, Musk responded with an emphatic "Absolutely." These remarks followed a series of extensive discussions between a Tesla team and Indian officials during their visit to Delhi.

Shortly after the meeting, Union Minister Rajeev Chandrashekar declared that Tesla was "very seriously looking at India as a production and innovation base." He assured that the Government of India is fully committed to collaborating with Tesla, ensuring the success of their ambitions and investment objectives in the country, according to Reuters.

Why does Tesla need to Act Quickly?

Musk must establish a production facility as soon as possible to accomplish Tesla's goal of selling 20 million electric vehicles yearly starting in 2030. The aim represents a significant increase above the 1.3 cars it now produces annually, needing a significant ramp-up in production capacity. In the meantime, rivals like Mercedes, BMW, and Volkswagen are catching up in the fight for electric vehicles.

Tesla currently operates six factories, four of which are located in the US. It has two Gigafactories in Berlin and Shanghai that can produce both automobiles and batteries. Mexico has been chosen by the firm to host a new Gigafactory.

Demand and Challenges of Tesla Within India

Tesla cars are notable for their aerodynamics, clean aesthetics, and high-end features like Autopilot, which allows a car to drive, accelerate, and brake autonomously while staying in its lane.

In India, the market for electric vehicles is expanding quickly as a result of the government's emphasis on renewable energy. Tata Motors, which is pushing out affordable electric vehicles at many price points below ₹ 20 lahks, now dominates auto sales in this sector.

The future of Tesla depends on how aggressively it can price its vehicles in a price-sensitive country like India while still providing its consumers with access to cutting-edge technology.