Elon Musk Wants To Bring Tesla To India But Custom Duties Are An Issue

Replying to a Twitter user who asked Tesla CEO Elon Musk to bring his brand of electric cars to India, the world's second-richest person replied that he wanted to bring Tesla to India but he was up against the challenge of custom duties which were by far the highest in the world. 

"We want to do so, but import duties are the highest in the world by far of any large country!  Moreover, clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India," tweeted the billionaire who is also the founder of SpaceX.

"But we are hopeful that there will be at least a temporary tariff relief for electric vehicles. That would be much appreciated," added Musk in a tweet indicating that Tesla was on the cusp of some breakthrough with the Indian authorities for the relaxation of import duties for EVs. 

Tesla which registered its Indian entity only earlier this year was originally slated to be launching an imported Model 3 which was also spotted for testing in India. But that's not happened because a Model 3 would be more than 2x its US price even if it were to be imported from China. 

We want to do so, but import duties are the highest in the world by far of any large country!

Moreover, clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India.

— Elon Musk (@elonmusk) July 23, 2021

"If Tesla is able to succeed with imported vehicles, then a factory in India is quite likely," Musk tweeted on the same thread. Tesla has been looking at India as a potential spot for a gigafactory or a battery facility, however, its biggest challenge to be successful in India is the anaemic infrastructure for EVs. 

While the Model 3 has become the best selling EV in the world even at its US price, it is an expensive car for the Indian market and with the addition of custom duties, it competes with luxury cars from German manufacturers like BMW and Mercedes. 

Last September at its battery day event, Tesla also unveiled plans for an affordable sub $25,000 hatchback which could be targeted at emerging markets like India which have a low per capita income. 

India has high import tariffs because of the Modi government which wants to boost local manufacturing. India's pitch is to commit to the market by building manufacturing capability and get more incentives, but it penalises anyone who wants to import with high taxes which Musk describes the highest in the world.