New Delhi: Citing the current import duty structure, US-based electric vehicle (EV) giant stated on Tuesday that while it has been actively exploring entry into India’s automotive market, the country remains “a very hard market” to penetrate.
Speaking to investors on a Q1 earnings call, Tesla CFO Vaibhav Taneja said, “I don’t want to talk just about tariffs, but the current tariff structure with India is that any car which we send in is subject to 70 per cent tariff. Also, a 30 per cent luxury tax on it. So, the same car which we’re selling is 100 per cent more expensive than what it is. That creates a lot of anxiety and people feel they’re paying too much for the car.”
“And by the way, we’re not getting the money. The local government is getting the money. And that’s why we’ve been very careful trying to figure out when is the right time,” he added.
“We are working on it. It would be a great market to enter because India has a big middle class, which we would want to tap in, and that is the market which we want to be in. But, again, these kinds of things create a little bit of tension which we’re trying to work around,” Taneja further added.
CEO Elon Musk has long criticised India’s steep import tariffs and the company has consistently lobbied for their relaxation. However, the push has met resistance from domestic automakers as they fear stiff competition.
The Central government is also pulling out all stops to woo the American EV giant. To ease the entry of global EV makers and boost domestic production, a new policy has been proposed that could reduce EV import tariffs from around 70 per cent to 15 per cent for companies committing to localise a portion of their manufacturing in the country.
India entry in the works
Earlier this month, a Reuters report said Tesla has signed a lease deal to open its first showroom in Mumbai, as it moves towards a goal to sell imported cars in India, registration papers show, after it dropped similar plans last year. The company recently also posted job advertisements looking to hire senior staff in India.
Last week, Prime Minister Narendra Modi took to X (formerly Twitter) to share highlights of his recent conversation with Elon Musk. The discussion touched on a range of topics, revisiting several key points from their earlier meeting in Washington DC earlier this year.
“I am looking forward to visiting India later this year!” Musk wrote on X, responding to the PM’s earlier message.
This comes at a time when negotiations are underway for a potential bilateral trade agreement between India and the US.
Tesla Q1 Earnings
Tesla’s quarterly profits fell by 70 per cent to $409 million for the first three months of the year. Its revenue fell 9 per cent to $19.3 billion in the January through March period.
Musk said Tesla is not immune to sort of the “macro demand for cars” and it will continue to focus on “affordability”.
“When there is economic uncertainty, people generally want to pause on buying, doing a major capital purchase like a car,” he said.
