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The fate of American electric vehicle (EV) giant Tesla, particularly regarding any concessional import duty structure or ‘favourable conditions’, is to be decided only after the General elections.
The company is expected to bring in the completely built units (CBUs) to kickstart its operations in India, people in the know told businessline.
“The talks are going for long now and Tesla needs cuts in first attempt to be super successful in India and touch masses…but I think any changes in import duty will definitely come after the elections now,” said a person aware of the developments.
Currently, the government charges import duty of 70 per cent on CBU cars whose value is less than $40,000 (around ₹32 lakh) and 100 per cent on CBU cars whose value is more than $40,000. And, Tesla is likely to bring in cars, which are low costs ranging between ₹25 lakh and ₹35 lakh, as per industry veterans.
Elon Musk, CEO of Tesla, in January had said that the “next-generation” entry level of compact EV could come at $25,000 to compete with the growing Chinese EV makers. But Musk also added that such vehicles could come by 2025 only and did not mention in which markets. Currently Tesla sells a base Model 3 (sedan) for around $39,000 in the US market.
According to sources in the industry, it will not be a cake walk for the company to enter India with so many conditions favouring only one company, especially as homegrown companies like Tata Motors, Mahindra & Mahindra (M&M) and Maruti Suzuki have invested billions of dollars over the last few years.
“All of them (Tata, M&M and Maruti Suzuki) have plans to launch five-six vehicles each in the EV segment over the next few years, so favouring Tesla or giving the company subsidies on imports would harm the existing players,” said a Delhi-based industry veteran.
Not only that, it would also harm companies like Hyundai and Kia which are selling EVs around the same price brackets or a little higher, he added.
Level-playing field
Even luxury car-makers like Audi and Mercedes-Benz have said that Tesla coming into India is a welcome step, but should be on a level-playing field, though Tesla’s models, which are routed for India, would not be a major threat to them.
“It will grow the industry and of course this brings in more competition and competition is always good for the customer, as they will be able to fetch the benefits. In terms of benefits to Tesla (from the government), level-playing field is all we expect. All should have the possibility to grow and I am sure the government will be mindful of this,” Balbir Singh Dhillon, Head, Audi India, had recently told businessline.
“We welcome any new entrant to the market because it drives market growth, adoption of EVs because this player is particularly in EV space…as far as government is concerned, in our discussion with the government, they have assured us that if at all there is any change in the policy, they will take care of the current investments and current players in the Indian car market, which I think is reasonable enough,” Santosh Iyer, Managing Director and Chief Executive Officer, Mercedes-Benz India, had said.
