Tesla had set itself a deadline of February 1.
New Delhi:
Tesla Inc has suspended plans to sell electric cars in India, halted a search for showroom space and reassigned some of its domestic team after failing to get lower import taxes, three people familiar with the matter told Reuters .
The decision caps more than a year of stalled talks with government representatives as Tesla first tried to test demand by selling electric vehicles (EVs) imported from manufacturing hubs in the United States and China at lower rates.
But the Indian government is urging Tesla to commit to local production before cutting tariffs, which can reach as much as 100% on imported vehicles.
Tesla had set itself a deadline of Feb. 1, the day India will reveal its budget and announce tax changes, to see if its lobbying efforts paid off, sources familiar with the company’s plan told Reuters.
When Prime Minister Narendra Modi’s government did not offer a concession, Tesla shelved plans to import cars into India, the sources added, who sought anonymity because the deliberations were private.
For months, Tesla had been looking for real estate options to open showrooms and service centers in the key Indian cities of New Delhi, Mumbai and Bengaluru, but that plan has now also been shelved, two of the sources said.
Tesla did not respond to an email requesting comment.
A spokesman for the Indian government did not immediately respond to a request for comment.
Tesla has assigned additional responsibilities for other markets to part of its small team in India. Indian policy officer Manuj Khurana has taken on an additional “product” role in San Francisco since March, according to his LinkedIn profile.
In January, CEO Elon Musk had said Tesla is “still facing many challenges with the government” regarding sales in India.
But strong demand for Tesla’s vehicles elsewhere and the deadlock over import taxes prompted the shift in strategy, the sources said.
Modi has tried to lure manufacturers with a “Make in India” campaign, but his transportation minister, Nitin Gadkari, said in April that it would not be a “good proposition” for Tesla to import cars from China to India.
But New Delhi had taken a win in January when German luxury car maker Mercedes-Benz said it would assemble one of its electric cars in India.
Tesla had been trying to gain an early advantage in India’s small but growing electric vehicle market, now dominated by domestic automaker Tata Motors.
Tesla’s price tag of at least $40,000 would place it in the luxury segment of the Indian market, where sales make up only a small fraction of its annual car sales of about 3 million.
