Tesla and India continue game of ‘chicken’ to see who bites first

Tesla and India have been playing a big game of “chicken” for the better part of the last three years to see who bites first.

Based on the latest comments from government officials in India, it is not going to end anytime soon.

Tesla and India have been wanting to partner for years, and things got more serious a few years ago when CEO Elon Musk and Prime Minister Narendra Modi both made indications they were interested in working together.

Tesla wants to build a plant in India, and the government obviously wants Tesla there. However, Indian government officials are playing hardball to get Tesla to dump hundreds of millions into a plant.

Not necessarily against the idea of building cars domestically, Tesla has said it would build a plant in India if demand was strong enough. The company has attempted to test demand by importing vehicles from China or Germany into the market.

But India, a country with a strong emphasis on domestic manufacturing, does not want Chinese-built vehicles, or even vehicles from Germany, which Tesla could also import from, in their market.

India charges hefty import duties on vehicles, with any car priced over $40,000 having a 100 percent import tax, doubling the price.

Tesla has attempted to have the duties rolled back or even removed altogether so it can accurately test demand. India won’t commit to that unless Tesla says it will build a factory regardless, initiating a three-year-long stalemate between the two.

Great meeting you today @elonmusk! We had multifaceted conversations on issues ranging from energy to spirituality. https://t.co/r0mzwNbTyN pic.twitter.com/IVwOy5SlMV

— Narendra Modi (@narendramodi) June 21, 2023

Any concession by India is unlikely, especially based on the latest comments from officials, according to 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,” Junior Minister of the Ministry of Commerce and Industry Som Parkash said on Wednesday.

We’ve done a deep dive into the Make in India campaign that the country launched several years ago to incentivize domestic manufacturing.

However, Tesla has been very adamant that it will eventually invest in India.

“I am confident Tesla will be in India, and we’ll do so as soon as humanly possible,” Musk said earlier this year. “Hopefully, we’ll be able to announce something in the not-too-distant future. We don’t want to jump the gun on an announcement, but it’s quite likely that there will be a significant investment and relationship in the future.”

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