Topline
Tesla executives will visit India and meet with government officials later this week in an effort to expand its supply chain in the country, Bloomberg reported, marking the latest effort by the electric vehicle maker to build a presence in the world’s most populous country and reduce its dependence on China.
A Tesla Model Y is displayed at a Tesla store in Yantai, East China’s Shandong.
Key Facts
Citing unnamed sources at the company, Bloomberg reported that Tesla executives will meet “government representatives,” including officials from Prime Minister Narendra Modi’s office, to “discuss local sourcing of components for Tesla’s models.”
The report adds that Tesla’s contingent will include C-suite executives and supply chain managers, but no one was named.
Indian government officials and Tesla’s leadership—including CEO Elon Musk—have previously clashed over the country’s steep duties on imported vehicles, and the visiting executives are expected to bring up the issue once again, the report added.
Sourcing key components from India is likely an effort to reduce its reliance on China amid rising tensions between Washington and Beijing.
What We Don’t Know
It is unclear how this plan will be received by Indian government officials and if it will finally open the door for Tesla to sell its cars in India. Indian government officials have previously indicated they want Tesla to commit to manufacturing its EVs in the country, something that seems highly unlikely now. India’s government has also indicated it will not allow the carmaker to import vehicles made in its Shanghai factory, owing to political tensions between India and China.
Big Number
100%. That is the total import duty that India charges on foreign-made vehicles priced more than $40,000—including insurance and shipping costs. Tesla’s least expensive Model 3 costs more than $40,000 and would be subject to this duty, pushing its price in the country above $80,000.
Key Background
Despite several years of speculation, Tesla cars are not officially available in India, the world’s third-largest auto market. Tesla CEO Musk has repeatedly blamed this on India’s steep import duties, noting that they are “the highest in the world by far of any large country.” The billionaire has urged the Indian government to allow a temporary tariff relief for electric vehicles, claiming it would be good for India’s climate goals. New Delhi has been lukewarm to Musk’s overtures and has indicated it would only consider a request for lower tariffs if Tesla commits to sourcing at least $500 million of its components from the country. Tesla isn’t the only automaker making these requests as both Volkswagen and Hyundai have also appealed for lower tariffs on imported electric vehicles.
Further Reading
Tesla Executives to Visit India This Week in Pivot Beyond China (Bloomberg)
Source: https://www.forbes.com/sites/siladityaray/2023/05/16/tesla-execs-will-reportedly-meet-indian-officials-in-coming-days-in-push-to-reduce-reliance-on-china/