Tesla Might Drive Away from India’s Electric Ambitions

Tesla Inc.

TSLA 7.33%

can push back from India, and this country alone has to bear the responsibility.

On Friday, Tesla CEO Elon Musk tweeted that his company won’t put a manufacturing plant anywhere where it’s not authorized to sell and service cars first. His tweet was in response to a user asking about his plans to make electric cars in India.

For the past three years, India and Tesla have been competing over market access and the conditions under which Tesla would consider manufacturing there. Prime Minister Narendra Modi’s government wanted Tesla to make cars locally from the start. Mr. Musk wants lower car import taxes, possibly as high as 100%. Tesla appears to want to test the market with imported cars before committing to manufacturing any products in India.

India’s unwillingness to compromise seems short-sighted at a time when China’s tough Covid control policies are prompting more foreign companies to become more serious about diversifying away from the world’s factory base. gender. The Indian government may be concerned that allowing Tesla to easily import cars will thwart its plans to attract other electric vehicle manufacturers to the country, but India’s own market for electric cars is highly Such level is very small.

Moreover, India may be on the verge of losing out to nickel-rich Indonesia. The Indonesian president visited Mr. Musk in Texas in early May. The upbeat comments from the Indonesian Investment Minister, reported by local media after the visit, suggest that negotiations over the Tesla factory in Indonesia may be underway. The Southeast Asian country has attracted major investments in the EV battery space from companies such as LG Energy Solutions and China’s Contemporary Amperex Technology Co.

India wants electric vehicle sales to account for 30% of personal cars and 70% of commercial vehicles by 2030, and has introduced measures to encourage production and demand. But despite the obvious potential and rapid growth, EV sales have been tiny to date: only about 1% of total car sales, although two-wheeler EVs are more common. According to data from JATO Dynamics, an automotive market research firm, the average price of a car sold in India is around 926,708 Indian Rupees ($12,000) compared to an average cost of $52,200 for one. Tesla.

India has several advantages: large population and low labor costs. But it lacks advantages such as abundant raw materials for batteries. And success in attracting investment from other automakers has so far been a mess. Mercedes-Benz plans to launch the locally assembled EQS – an electric version of its flagship S-Class sedan – this year. Ford,

however, recently dropped plans to produce electric vehicles in India.

If India dreams of competing with Southeast Asia, not China, as an electric vehicle hub, it needs a large and lucrative domestic market or export-friendly policies. . Regardless of the world’s largest electric vehicle manufacturer.

Write letter for Megha Mandavia at megha.mandavia@wsj.com

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https://www.wsj.com/articles/tesla-might-drive-away-from-indias-electric-ambitions-11653998969?mod=rss_markets_main Tesla Might Drive Away from India’s Electric Ambitions

Edmund DeMarche

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