Officials rule out company specific incentives for Tesla

The six women have filed independent lawsuits against the electric car maker

Government officials have ruled out any company-specific incentive to Tesla Motors to help import its cars from abroad or set up a production unit in India. Multiple officials told Moneycontrol that the company has been informed of this as well.

On January 13, Tesla CEO Musk responded to a post by Indian Twitter user Pranay Pathole asking when Tesla's electric vehicles would be launched in India by saying 'still working through a lot of challenges with the government'.

Incidentally, Musk had responded to Pathole, a Pune-based engineer's tweets earlier as well. Pathole is a fan of Musk and routinely praises the billionaire.

Tesla is keen on selling its cars in India but has complained that extremely high import duties on Completely Build Units (CBU) of foreign automobiles restrict the sales of its vehicles as well as that of electric vehicles in general.

Currently, India levies an import duty of 60 percent on electric vehicles that cost $40,000 or less, and 100 percent for those priced anything above. Most Tesla models souls fall in the latter category.

Officials said the company earlier told the government that import duties to come down before it can commit to an investment in India. "That has been their stated position and we have communicated to them that policies regarding import duties are made keeping in mind national goals, and do not revolve around a single company," a senior official said.

Meanwhile, Karnataka, Gujarat, Maharashtra, Andhra Pradesh, Telangana and Tamil Nadu have invited Tesla to set up a plant. Last year the company had registered an Indian subsidiary,  with the intent of running a factory in India.

The company has also received formal approval for seven of its models to hit the road in India. The homologation certificate certified that Tesla models meet the safety and product standards for India.

Domestic manufacturing

Officials again reiterated that foreign manufacturers can take advantage of production-linked incentive schemes for the automotive sector, including one for advanced chemistry cells for EVs.

“The company has been apprised of the details of India’s PLI scheme for automotive manufacturing. It has been pointed out that locally sourcing and manufacturing cars would lower the environmental impact of the production process,” a senior NITI Aayog official said.

Instead, Tesla has been arguing the opposite, the added. The government's chagrin at Tesla's lack of interest in manufacturing cars domestically has only continued to grow. This has been exacerbated by the fact that the carmaker recently hit record production numbers in next door China.

Some officials also stressed that existing incentives should flow to domestic companies, arguing that domestic electric vehicle companies have consistently sunk in funds to research and build in India.

In 2021, local companies such as Ather Energy and Ola Electric have announced plans to ramp up manufacturing capacity while several state government industrial departments have announced a policy push towards electric mobility.

The India Energy Storage Alliance projects that the Indian EV market will grow at a CAGR of 36 percent till 2026, reaching over 6.3 million units. According to the CEEW Centre for Energy Finance, the EV market in India will reach $206 billion by 2030. India remains the fifth largest automotive market in the world.