Elon Musk Explains Why India's New Plan is Bizarrely Stupid



Nitin Gadkari, India’s transport minister, stated on October 8 at a climate action forum that he had requested Tesla not to sell China-made electric vehicles in the nation. He instead wants the now-Texas-based automaker to “produce cars in India, sell in India, and export from India.” It seems, however, that Tesla isn’t planning to “produce cars in India, sell them in India, and export them from India” anytime soon. Tesla makes cars in plants in the United States and China, while a new facility in Germany is awaiting final approval. According to a posting on India’s road transport and Highway ministry, the company gained approval in August to manufacture or import four models. Tesla models would cost 3.5 million rupees ($46,671) each in India, and the government will provide whatever assistance the American automaker requires. Tesla has encouraged the government to standardize EV pricing and eliminate the social welfare levy, stating that doing so will benefit the country’s EV ecosystem while also protecting local interests. Gadkari said he was talking to Tesla executives about the company’s need for tax concessions. Cars are subject to a 100 percent import tariff by the Indian government, whereas entirely constructed units (CBUs) are subject to customs duties ranging from 60 to 100 percent. This is dependent on engine size and cost, insurance, and freight value of less than or greater than $40,000. The purpose of such hefty tariffs is to protect native manufacturers. However, the path to achieving goals is paved with speed bumps. Elon Musk, the company’s CEO, has frequently turned to Twitter to express his dissatisfaction with India’s local sourcing regulations and hefty import tariffs. Moreover, it hasn’t been able to sell, much alone manufacture, a Tesla in India for nearly five years, precisely because the government hasn’t provided the concessions that would tempt it to do so. The Indian market is now unprofitable for Tesla, which produced nearly two-thirds of the 568,000 electric cars sold in the United States between 2017 and 2020. Despite a few ardent early adopters who have been waiting in line for quite some time, India’s electric vehicle sector is still in its infancy. Indians purchased fewer than 5,000 electric four-wheelers in 2019-20. In addition, the costs are high, and there is a lack of charging infrastructure. Indeed, the lack of charging infra is a severe issue. With 77,000 fuel stations around the country, India has adequate infrastructure for internal combustion engine cars. This assures drivers that they will not be stuck wherever they go. But, on the other hand, electric vehicles get their “fuel” from the remaining charge in the battery, and India currently has only 1,800 EV charging stations. 4,180 EV charging station projects are in the queue, with 2,636 sanctioned and another 1,544 in the works. Are these, however, sufficient, and how many more public chargers does India require to meet its expanding EV demand, and is India’s electric vehicle infrastructure ready? Even if Tesla hit the market, its products would be too expensive to compete with. “I’ve heard that import duties on electric automobiles are extraordinarily hefty (up to 100 per cent).” In 2019, Musk tweeted, “This would make our cars unaffordable.” He is correct. For entirely built imported cars costing more than $40,000, as Tesla does, the customs duty is 100 percent. These high barriers are intended to safeguard domestic manufacturers, but they may be too high for the price-sensitive market.

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