The main area of contention in the talks surrounding Elon Musk’s Tesla’s entry into India is the non-disclosure of important information, such as price and investment forecasts. The electric vehicle (EV) manufacturer, with its headquarters in Texas, has not released the price of its vehicles for the Indian market. Senior government sources told Business Standard that there are further worries about the investment’s calculation process and the lack of a defined schedule for its introduction.
“Tesla has shown reluctance to divulge important information regarding its intentions, particularly the intended price range for the introduction of its cars. A senior official with knowledge of the situation added, “In addition, the company is not providing a timeline for beginning the construction of its plant and initiating local manufacturing.”
How can Tesla’s price point affect its future in India?
The price of Tesla’s ambitions has the government wary. The cheapest Tesla model available right now costs $48,590 (around Rs 40 lakh). In an effort to provide more cheap models, Musk declared ambitions to create an electric car for $25,000 (about Rs. 20 lakh) during Tesla Battery Day in 2020. The Indian government is worried that Tesla may exploit the Indian market by releasing more reasonably priced models after the transaction is finalised if the company doesn’t confirm the price point before closing the contract.
“Tesla won’t be able to develop a facility in India because of the exorbitant price point. It’s very possible that Tesla would introduce more reasonably priced variants to test the Indian market. The company may leave after taking advantage of years of duty reductions if, even after that, it still doesn’t think the market is attractive, the official stated.
While Tesla is keeping its pricing and production schedules under wraps, it has promised to issue a bank guarantee for the suggested investment, if under certain restrictions. The insider stated, “They have agreed to provide a bank guarantee, but they have demanded that their dealership network and charging infrastructure be included in the investment calculation.”
At the moment, India only accepts investments that are used to build machines and factories as qualifying investments. The Prime Minister’s Office (PMO), which is the nodal ministry negotiating with the company, has ordered the Ministry of Commerce and Industry to compare typical automobile pricing in India to other international markets, which is another reason for the delay. Additionally, it has requested that the government evaluate whether significant duty reductions may affect India’s “Make in India” programme.
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