Deja vu. Tesla (TSLA) is reportedly exploring entering the Indian auto market again after several unsuccessful attempts in the last few years.
India is the biggest auto market that Tesla has yet to enter.
Tesla has been trying to get into the Indian automotive market for years, but it wasn’t able to find a way around the country’s protectionist effort, which includes high import duties on vehicles being imported.
The Indian government wanted Tesla to build a factory in the country, but the automaker preferred to first establish a market in the country through imported vehicles before investing in a manufacturing facility in the country.
Earlier this year, we reported that India finally came up with a compromise on its import duties on cars to open the door for Tesla and other EV automakers to launch in the country.
The deal involves greatly reducing import duties for a limited number of electric vehicles as long as the automaker makes a significant investment and commitment to build an electric vehicle factory in India in the coming years.
It looked like Tesla had a hand in making that deal happen considering the automaker was working closely with the government, and there were indications that Tesla was going to take them up on the deal.
CEO Elon Musk planned to go to India shortly after the deal was announced – hinting at closing a deal for Tesla to launch in the market and building a factory there.
However, the CEO canceled his trip to India at the last minute and went to China instead.
It didn’t look like Tesla was going to take the Indian government’s offer as the American automaker’s effort in the market appeared to have stalled, but things are now moving again.
Reuters reports that Tesla is now talking with real estate group DLF about finding a showroom in New Delhi:
Tesla, which had paused its search for a showroom in India in recent months, is now in early-stage talks with DLF to help secure space in the capital region, said the two sources, who have direct knowledge of the situation.
However, the talks are reportedly in the early stages and they could not add up to anything.
Under India’s current new program for foreign EV manufacturers, the import tariffs are only limited to 15% and apply to only 40,000 vehicles, no more than 8,000 per year.
The automaker benefiting from those lower import tariffs also needs to make a ~$500 million USD investment into local EV manufacturing over 5 years, but it has to start no later than within 3 years of starting the imports.
Electrek’s Take
The deal was not great, but the Indian market is big enough that it could convince a few EV automakers to take that route.
It could make sense for Tesla to start deliveries of its higher-end, more expensive vehicles and take orders for its cheaper lineup.
It will help get an idea of the demand while establishing its infrastructure ahead of a bigger launch with local manufacturing.