NEW DELHI: Tesla Inc has put on hold plans to sell electric cars in India, abandoned a search for showroom space and reassigned some of its domestic team after failing to secure lower import taxes, three people familiar with the matter told Reuters.
The decision caps more than a year of deadlocked talks withgovernment representatives as Tesla sought to first test demand by selling electric vehicles (EVs) imported from production hubs in the United States and China, at lower tariffs.
But the Indian government is pushing Tesla to commit tomanufacturing locally before it will lower tariffs, which canrun as high as 100% on imported vehicles.
Tesla had set itself a deadline of Feb. 1, the day Indiaunveils its budget and announces tax changes, to see if itslobbying brought a result, the sources with knowledge of thecompany’s plan told Reuters.
When Prime Minister Narendra Modi’s government did not offer a concession, Tesla put on hold the plans to import cars into India, added the sources, who sought anonymity because the deliberations were private.
For months, Tesla had scouted for real estate options toopen showrooms and service centres in the key Indian cities of New Delhi, Mumbai and Bengaluru but that plan is also now on hold, two of the sources said.
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 othermarkets to some of its small team in India. Its India policyexecutive Manuj Khurana has taken on an additional “product” role in San Francisco since March, his LinkedIn profile shows.
As recently as January, Chief Executive Elon Musk had saidTesla was “still working through a lot of challenges with thegovernment” in regard to sales in India.
But the strong demand for Tesla’s vehicles elsewhere and the standoff over import taxes prompted the shift in strategy, the sources said.
Modi has sought to lure manufacturers with a “Make in India” campaign, but his transport minister, Nitin Gadkari, said in April it would not be a “good proposition” for Tesla to import cars from China to India.
But New Delhi had clinched a win in January, when Germanluxury carmaker Mercedes-Benz said it would startassembling one of its electric cars in India.
Tesla had looked to gain an early advantage in India’s smallbut growing market for electric vehicles, now dominated bydomestic automaker Tata Motors.
Tesla’s price tag of $40,000 at minimum would put it in theluxury segment of the Indian market, where sales make up just a tiny fraction of annual vehicle sales of about 3 million.
