Tesla cools interest in India as Elon Musk seems to focus on China

Tesla cools interest in India as Elon Musk seems to focus on China

Tesla’s plan to make a splash in the Indian market appears to have hit a roadblock since Elon Musk abruptly postponed his visit to the country in April and dashed to China instead.

The electric carmaker’s executives have ceased contact with Indian officials, leading them to conclude that Musk does not intend to invest in the country in the near future, Bloomberg reported.

Tesla was reportedly looking at India, the world’s third-largest automobile market, as the next destination for growth.

The company put the plan on hold after the Indian government reportedly insisted that it produce cars locally, just as it does in China. The carmaker would have preferred importing vehicles initially to gauge demand.

Mr Musk had said Tesla would be in India “as soon as humanly possible” after a meeting with Indian prime minister Narendra Modi during his state visit to the US last year. "He really cares about India because he’s pushing us to make significant investments in India, which is something we intend to do. We are just trying to figure out the right timing," Mr Musk said, calling himself a “fan of Mr Modi”.

“I am confident that Tesla will be in India and will do so as soon as humanly possible."

The carmaker planned to invest $2 to $3bn and build a new factory in India, Reuters reported in April. Mr Musk was expected to announce the deal after meeting with Mr Modi in April.

But he cancelled the visit. He said “very heavy Tesla obligations require the visit to India be delayed, but I do very much look forward to visiting later this year”.

Just a week later, the mercurial billionaire made an unplanned visit to China.

The visit reportedly helped Tesla clear regulatory roadblocks related to the launch of self-driving software in the country, a crucial market for the company. Mr Musk met Chinese premier Li Qiang and Tesla’s Model 3 and Y vehicles passed the country’s data security requirements soon after.

Now that Tesla has cooled interest in India, officials told Bloomberg that they were looking to domestic car makers for boosting electric vehicle production. But Tesla would still be welcome to avail a new import tax policy if Mr Musk decided to re-engage, they said.

The Tesla gigafactory in Shanghai, China (Xinhua)
The Tesla gigafactory in Shanghai, China (Xinhua)

Tesla’s apparent ghosting of India comes just as its Model Y has been made available for government purchase in China, according to state news outlet Paper.cn.

The Model Y, a fully electric compact crossover SUV, has been included in a list of electric and hybrid vehicles that local governments can purchase for use as service cars.

India likely still remains on Mr Musk’s radar. He congratulated Mr Modi after his swearing-in as prime minister for the third time last month.

"Congratulations Narendra Modi on your victory in the world’s largest democratic elections! Looking forward to my companies doing exciting work in India," he wrote on X.

Mr Modi responded saying “Indian youth, our demography, predictable policies and stable democratic polity will continue to provide the business environment for all our partners”.

India’s electric vehicle market is small but growing. It’s currently dominated by the local carmaker Tata.

Mr Modi’s government is targeting 30 per cent of new cars to be electric by 2030, up from about 2 per cent currently.

In recent years, Mr Musk has opposed India’s high import taxes on electric vehicles and lobbied for change. In March, India’s government introduced a new policy reducing import taxes from as high as 100 per cent to 15 per cent on certain models, provided the carmaker invests at least $500m and establishes a factory in the country.