The Indian government no longer expects Tesla to invest in local production anytime soon. Chief Executive Elon Musk ceased contact with officials about the investment, Bloomberg reports, citing people familiar with the matter.
Tesla CEO ceases contact
According to the unnamed sources, Tesla’s team has ghosted Indian government officials about the potential investment in a new domestic electric vehicle production plant.
Tesla reportedly cut connections with officials in New Delhi after CEO Elon Musk canceled his trip to India in late April 2024.
Interestingly, Tesla currently has capital issues that impede it from making new investments in India in the near future.
Tesla’s sudden loss of interest in Indian investment occurred after recording its second consecutive decline in global quarterly deliveries amid intensifying competition in the Chinese market.
Brief background
Tesla has been trying to penetrate the Indian automotive market for several years already.
However, the country’s high import duties and vehicle imports made it extremely challenging for the Musk-led company to sell its products there.
The Indian government has been courting Tesla to invest in a new local factory instead of just importing its electric vehicles.
However, Tesla wanted to first test the demand in the Indian market through imports before it committed to a new factory.
Tesla and the Indian government seem to have found a way to compromise earlier this year, with the latter announcing lower import tariffs for companies committing to invest in a domestic plant within three years.
At the time, it appeared that Tesla influenced the Indian government’s decision to develop a new policy. There were also indications that Tesla was considering taking the offer to benefit from lower import tariffs.
CEO Musk was supposed to meet PM Modi in India after the new policy announcement, hinting at a potential agreement. However, the Tesla boss canceled the trip due to certain pressures in the electric automaker.
Now, the latest report suggests that Tesla is once again delaying its planned entry into the Indian EV market.
Pivot
The report implies that Tesla is currently facing issues with its automotive business over the past few quarters.
The American EV giant may be considering the timing of its long-standing plans to expand in India, especially given the government’s restrictive conditions.
It is also interesting to note that after CEO Elon Musk canceled his trip to India, he ended up visiting China. For context, China has advanced as the company’s primary production hub.
Tesla is also currently pushing to launch its Full Self-Driving (FSD) suite in the Chinese market.
With Tesla losing contact, India’s government is now banking on its homegrown automakers, like Tata Motors and Mahindra & Mahindra, to accelerate electric vehicle production in the country. If Tesla decides to restart negotiations, the government said it will still offer the Musk-led company the incentives under the new import tax policy.
