China is not a fan of Elon Musk, the CEO of Tesla, who wants to establish an electric vehicle manufacturing in India. Later this month, Musk is scheduled to visit India and meet with Prime Minister Narendra Modi for a discussion of Tesla in India. It is anticipated that plans for a Tesla factory would be revealed at that time.
Musk and the Indian government have been negotiating for a while. India asked him to make automobiles there, but he opted to import cars at a lower duty. After the government unveiled its new EV policy last month, which is likely to suit him, he is expected to announce Tesla’s entry into India.
In exchange for a minimum investment of $500 million to begin local production, the government will permit the import of fully assembled electric cars with a minimum cost, insurance, and freight value of $35,000 (Rs. 29.2 lakh) at 15% import tariff for five years. India imposes import duties on fully assembled autos of up to 100%.
Yet, China is not fond of Tesla’s anticipated arrival in India. The Global Times, which is seen as a spokesman for the Chinese government, has cursed India’s bold move to invite Tesla, saying it will fail since the Indian market is still too young and woefully unprepared. The gloomy assessment fails to mention that the Indian government has previously refused to permit several large Chinese EV manufacturers to produce EVs in India despite their expressed enthusiasm in doing so.
Relationships between China and India have worsened as a result of border disputes that previously caused battles. India has closely examined Chinese investments and looked into possible wrongdoings by a number of Chinese companies.
Tesla in India: Sour grapes?
According to the Global Times report, Tesla’s much-awaited investment in an electric vehicle factory in India will definitely benefit the country and increase EV manufacturing, but it also makes the case for why Tesla could not be successful there.
“As for Tesla, which focuses mainly on the mid- and high-end sectors and mature markets, nobody knows if it will find success in India,” according to the article. “The EV market in India is expanding, but it is still rather tiny. According to certain data, only 2.3% of all passenger cars sold in India in 2023 were electric vehicles.”
According to the report, one of the main obstacles to India’s widespread adoption of EVs is the lack of public charging infrastructure. To make matters worse, customers in some parts of the country frequently experience power shortages. It claims that India is approaching a power shortfall and that the country’s efforts to meet climate targets would be hampered by its development of coal mines and power plants.
It also doubts if India’s developing market would accept enough Tesla vehicles for it to turn a profit.
The supply chain is one of the challenges mentioned in the article. “Limited domestic production of essential components, such as lithium-ion batteries for electric vehicles, is one of the main problems. It states that India is attempting to establish an indigenous EV supply chain comparatively late.
Tesla’s promise for India and its China issue
The Chinese factory that Tesla owns and operates is having problems. When information revealed that deliveries from Tesla’s Shanghai Gigafactory had decreased, the company’s shares dropped last month. Later in the month, Bloomberg revealed that Tesla, the American electric vehicle manufacturer, had lowered car output at its China operation due to sluggish demand and fierce competition.
According to the article, the business instructed workers at its Shanghai facility to work five days a week instead of the customary six and a half, in order to reduce output of the Model Y sport utility vehicle and Model 3 sedan, the two models it manufactures in China.
Additionally, Tesla shipped 387,000 vehicles globally in the first quarter, an 8.5% decrease from 423,000 at the same time previous year. For the first time since a little decline at the beginning of the pandemic in 2020, Tesla’s quarterly sales decreased year over year during this quarter.
Chinese electric vehicle manufacturers, who are flooding the market with vehicles starting at $10,000, are a serious threat to Tesla. Tesla is up against BYD and a plethora of other competitors in China that want to go global. Rivals of Tesla have kept reporting higher sales. According to BYD, it sold over 300,000 electric cars in the first three months of this year, a 13% increase over the same period last year. Additionally, the business sold 324,000 plug-in hybrid cars in the first quarter, a 15% increase. vehicles to South America, Southeast Asia, and Europe.
With their low-cost electric vehicles, Chinese automakers have jumped ahead of their Western counterparts, seizing market dominance, achieving economies of scale, and providing customers with unbeatable deals.
According to Reuters, Tesla was forced to shelve the low-cost vehicle that investors had been hoping would propel the company’s expansion into a mass-market automaker due to fierce competition from Chinese EV manufacturers.
Nonetheless, India presents China with a sizable, unexplored market where the adoption of EVs is still quite low.
FAQs
What Elon Musk said about Tesla in India?
The world’s most populous nation today is India. Just like every other nation, India ought to have electric vehicles. Offering Tesla electric cars in India is a logical next step,” Musk said, reiterating the company’s dedication to advancing the country’s EV market.
Why Tesla got rejected in India?
It does, however, impose import charges of 15–30% on parts that are sent for domestic assembly. Elon Musk’s Tesla Inc. requested tax incentives from India to import electric automobiles, but the country declined, citing existing regulations that permit the importation of partially assembled cars at a reduced import duty.
Will Tesla be launched in India?
The Indian government’s proposal to establish a vendor base in India has already received Tesla’s approval. According to reports, the business has been instructed to start building up the vendor base and assembling electric vehicles in India.
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