Tesla Not Reaching Indian Market Yet: Negotiations Deadlocked

The Indian government and Tesla have been negotiating for the past few months. Despite the efforts, an agreement has not been reached yet, and Tesla is still not officially operating in the country.

Along with China, India is one of the markets with the greatest potential in the world: with a population close to 1,400 million people, all brands naturally seek to offer their products in this huge country. Tesla is one of them, although it finally seems that it will not be like that yet. After a tough negotiation with the national government, the company basically shelved the idea of selling cars in India; or at least that is what many different sources claim.

Although only 55% of the Indian population owns a car, it is a vast market where potential sales are a more than justified reason to embark on a commercial adventure. With an impressive labor pool, the Indian government has long wanted to attract manufacturers under the "made in India" campaign. The idea of the government is that the brands that want to have tax benefits must commit to deriving production to the country.

At no time have Tesla's plans gone through opening a new Gigafactory in India, at least not at an official level: the costs and the situation of the electricity market in the country are not yet sufficiently attractive to take such a step. Tesla has been negotiating with the Indian Government in order to obtain certain fiscal advantages in the tariffs on imported cars, something that neither the Prime Minister, Narendra Modi, nor the Minister of Transport, Nitin Gadkari, liked so much; even pointing out that Tesla's offer "wasn't a good proposition".

According to Reuters, Tesla had set February 1 as the final trading deadline, although they have been looking for alternatives until just a few days ago when the operation was finally dismissed. Elon Musk himself acknowledged in January: "many challenges are still being worked on with the government". Such have been the challenges that the proposal has not come to fruition and basically forced Tesla to cancel commercialization plans, at least for the time being.

Tesla's proposal was to import to India cars manufactured in the United States and China, managing to reduce import tariffs in order to offer more attractive priced products. In India, a Tesla Model 3 is considered a luxury car given its high tag price, since we must take into account that India is a market greatly dominated by Tata Motors, a big corporation specialist in designing and manufacturing very cheap - though poor quality - cars.

Neither Tesla nor the Indian Government have commented on all this so far; apparently, Tesla is relocating part of its displaced team to the country. The search for locations for the points of sale, which initially were to be located in the main cities of the country such as Mumbai, Bangalore, Hyderabad and New Delhi, has also been paralyzed. Who knows if in a few months - or years - Tesla will try to open negotiations again; but without a doubt, India has become one of the first countries in the world not to bow down to the Austin giant.

Source: Reuters

All images courtesy of Tesla Inc.

Nico Caballero is the VP of Finance of Cogency Power, specializing in solar energy. He also holds a Diploma in Electric Cars from Delft University of Technology in the Netherlands, and enjoys doing research about Tesla and EV batteries. He can be reached at @NicoTorqueNews on Twitter. Nico covers Tesla and electric vehicle latest happenings at Torque News.