electrek:

Tesla’s entry into the Indian market is on shaky grounds again as the government says that a deal on import duties for electric vehicles is off the table.

India has the biggest auto market that Tesla has yet to enter. There has been a ton of back and forth between the Indian government and Tesla to make it happen, but the negotiations have been harder than usual.

The Indian government wants Tesla to build a factory in the country in order for them to enter the market, but the automaker prefers to first test the waters with imported vehicles.

However, India has strong EV import duties that prevent that.

In 2021, Tesla officially incorporated an Indian company in Bengaluru, the capital of India’s southern Karnataka state. During the summer, Indian government officials said that they are considering Tesla’s proposal to greatly reduce import duties for electric cars.

Later that year, Tesla vehicles were spotted being tested on Indian roads (pictured above), and the company got seven electric vehicle variants approved in the country.

However, the company wasn’t able to come to a deal on import tariffs, and in 2022, Tesla decided to put its plans to enter the Indian market on hold.

Over the last year, there has been a renewed effort for Tesla to enter the market and the company has engaged with the government in new negotiations.

Last month, we learned that India was again considering a special deal with Tesla to reduce the import duties.

A few weeks later, we learned that Tesla is reportedly closing in on a $2 billion deal to build a factory in India.

It appeared that with the promise of building a factory in the country, Tesla would be able to secure an exemption on the import duties for its electric vehicles and start establishing a market ahead of the start of production at the new factory.

However, such a deal appears to be off the table.

Som Parkash, junior minister of the Ministry of Commerce and Industry, told parliament late Wednesday (via Bloomberg):

“Presently, there is no proposal either to provide an exemption from local value addition cost or to provide a subsidy on the import duty on electric vehicles in India.”

It’s unclear if this is going to affect Tesla’s plan to build a factory in the country, but the automaker has made it clear that it would prefer importing vehicles in the market before establishing local manufacturing.

This is the latest in the several-year-long saga of Tesla trying to enter the Indian auto market.

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MuskWire TLDR:

Tesla’s entry into the Indian market is facing challenges as the government announces that a deal on import duties for electric vehicles is no longer on the table. India has the largest auto market that Tesla has yet to enter, and negotiations between the Indian government and the automaker have been difficult. The Indian government insists that Tesla build a factory in the country before entering the market, while Tesla prefers to test the waters with imported vehicles. However, India has high import duties on electric vehicles that prevent this. In 2021, Tesla incorporated an Indian company in Bengaluru, and there were talks of reducing import duties for electric cars. Tesla vehicles were spotted being tested on Indian roads, and the company received approval for seven electric vehicle variants in the country. However, a deal on import tariffs could not be reached, and Tesla put its plans to enter the Indian market on hold in 2022. There have been recent efforts to revive negotiations, with India considering a special deal to reduce import duties and Tesla reportedly closing in on a $2 billion deal to build a factory in the country. However, the government has now stated that there is no proposal to exempt Tesla from local value addition costs or provide a subsidy on import duties for electric vehicles. It remains uncertain how this will affect Tesla’s plans to build a factory in India, but the automaker has expressed a preference for importing vehicles before establishing local manufacturing. This ongoing saga represents Tesla’s persistent attempts to enter the Indian auto market.