Tesla suspends India entry plan after tariff standoff, sources say

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NEW DELHI – Tesla has suspended plans to sell electric cars in India, abandoned the search for exhibition space and reassigned part of its national team after failing to obtain lower import taxes, said three people familiar with the matter. Reuters.

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

But the Indian government is pushing Tesla to commit to manufacturing locally before lowering tariffs, which can reach 100% on imported vehicles.

Tesla had set a deadline of Feb. 1, the day India unveils its budget and announces tax changes, to see if its lobbying has paid off, sources with knowledge of the company’s plan said. Reuters.

When Prime Minister Narendra Modi’s government failed to offer a concession, Tesla suspended plans to import cars to India, added the sources, who spoke on condition of anonymity because the deliberations were private.

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

Tesla did not respond to an email seeking comment.

A spokesperson for the Indian government did not immediately respond to a request for comment.

Tesla has given additional responsibilities for other markets to part of its small team in India. Its head of India policy, Manuj Khurana, has taken on an additional “product” role in San Francisco since March, according to his LinkedIn profile.

As recently as January, Chief Executive Elon Musk said Tesla was “still working on many challenges with the government” regarding sales in India.

But strong demand for Tesla’s vehicles elsewhere and the standoff over import taxes prompted the change 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 that it would not be a ‘good proposition’ for Tesla to import cars from China to India. .

But New Delhi scored a victory in January, when German luxury carmaker Mercedes-Benz announced it would start assembling one of its electric cars in India.

Tesla had sought to gain an early advantage in India’s small but growing electric vehicle market, now dominated by domestic automaker Tata Motors.

Tesla’s price of $40,000 or less would put it in the luxury segment of the Indian market, where sales are a tiny fraction of annual vehicle sales of around 3 million.

(Reporting by Aditi Shah; Additional reporting by Aditya Kalra; Editing by Kevin Krolicki and Clarence Fernandez)

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