May 31, 2023

Great Indian Mutiny

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In India – there are doubts about Tesla’s expansion in the world

“We are still working with the government on a number of challenges,” Elon Musk, founder and CEO of Tesla, told a user on Twitter last weekend when asked about the status of the US company’s negotiations to sell its vehicles in India. Musk admitted to being in 2019.

The two sides are still at a distance because the Indian executive wants Tesla to set up a factory in its region to manufacture ‘Made in India’ vehicles, while the company wants to explore the Indian market and sell its cars without having to set up factory, Soumen. Mandal, a research analyst in the automotive industry at Bombay-based Counterpoint Research, explained to Efe.

“The Indian government wants (Tesla) to start production in India as it has agreed to enter China in 2019. At the same time Tesla” does not want to invest all at once “but understands whether consumers are paying. Their approval,” the expert said.

If the government has the agreement that it longs for prosperity, it will become the fourth country outside the United States to operate the Tesla plant – behind the world’s sixth largest automobile market, India, Canada, Germany and its regional rival China.

Indian protectionism

However, the movement is being slowed down by higher import prices of vehicles in the Asian country, which Musk criticized in another tweet, six months ago, when he returned, saying, “In the world, so far, no major country.” Recommend your company’s interest in expanding in India.

And cars with a selling price of more than $ 40,000 are currently 100% taxed, making it difficult for all Tesla vehicles of this type to fall, and to find competitive prices for their cars.

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According to Mandal, it is a protectionist move that the Indian government will not change, at least in the short term.

“If they are not involved in production, I do not think the government will reduce these taxes. (But) if Tesla says it is going to manufacture in India in two or five years, the government can reduce them,” he said. .

Lack of demand

With a population of over 1,350 million, with sales of 310,979 by 2021, another problem facing Tesla’s future entry into India is the lack of demand.

Although this figure is an increase of 160% from 2020 – when 119,446 new electric vehicles were registered – it still represents a small proportion in the Indian market, Mandal said.

Rajesh Menon, president of the Association of Indian Automobile Manufacturers (SIAM), clarified to Efe that “the penetration of electric vehicles has not been great, but in recent years it has been growing in all segments, mainly two-wheelers”. .

Contributing to this, both experts agreed on the tax benefits the government has provided to buyers in recent years.

The government “offers tax subsidies of up to Rs 150,000 (approximately $ 2,000) for four-wheelers and between Rs 5,000 and Rs 30,000 (US $ 67-402) for two-wheelers.”

“The goods and services tax for electric vehicles is 5% and for all other cars it is 28%,” Menon added.

Nevertheless, its high cost, accessible only to the upper classes of a poor country, and the trivial tendency to translate the Indian environment into concrete measures to improve the environment continue to raise suspicions in the American company.

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Resistance pressure

Political representatives in several Indian states, who oppose the current government of the Bharatiya Janata Party (BJP) led by Prime Minister Narendra Modi, used this uncertain panorama to pave the way for pressure on the administration throughout the week. At the auction, the respective regions to run Musk’s project.

“Maharashtra is one of the most progressive states in India. We will provide all the assistance you need to establish yourself in India. We invite you to set up your manufacturing plant in Maharashtra,” said Western Minister Jayant Patil. State, on Twitter. Finance with capital in Bombay.

A few hours later, Navjot Singh Xinhu, a prominent politician from North Punjab, followed suit, promising to create a “center for the electric vehicle and battery industry” in Ludhiana if Tesla chose his region, which would encourage development. “Green jobs, environmental protection and sustainable development.

Other ministers from Karnataka and Telangana in the south of the country and West Bengal in the east also expressed their region’s interest in hosting the future Tesla project, saying it was “a great place” to set up the plant. Become “Champion in Outstanding Infrastructure”, or “Sustainable Initiatives”.

Mandalay believes Musk was provoked when he released his initial tweet, part of a way to put pressure on the government through social networks.