Tesla lobbies India for sharply lower import taxes on electric vehicles


Making inroads: Tesla vehicles at charging stations outside a store in California. Tesla is likely to set up a factory in India if successful with imported vehicles. ― Bloomberg

NEW DELHI: Tesla Inc is likely to set up a factory in India if successful with imported vehicles, chief executive Elon Musk said on Twitter, after the company wrote to Indian ministries seeking a big reduction in import duties on electric vehicles (EVs), according to two sources with knowledge of the matter.

The electric-car maker’s pitch to lower duties, however, is likely to face resistance from Prime Minister Narendra Modi’s administration which has championed high import taxes for many industries in a bid to boost local manufacturing.

“We want to do so, but import duties are the highest in the world by far of any large country,” Musk said in reply to a tweet about launching the company’s cars in India.

“But we are hopeful that there will be at least a temporary tariff relief for electric vehicles,” Musk added.

Other luxury automakers in India have also lobbied the government in the past to lower taxes on imported cars but have had little success due to opposition from rivals with domestic operations.

Tesla, which aims to begin sales in India this year, said in a letter to ministries and the country’s leading think-tank Niti Aayog that slashing federal taxes on imports of fully assembled electric cars to 40% would be more appropriate, according to the sources.

That compares with current rates of 60% for cars priced below US$40,000 (RM169,060) and 100% for those above US$40,000 (RM169,060). “The argument is that at 40% import duty, electric cars can become more affordable but the threshold is still high enough to compel companies to manufacture locally if demand picks up,” one of the sources said. The sources declined to be identified as the letter has not been made public.

According to Tesla’s US website, only one model – the Model 3 Standard Range Plus – is priced below US$40,000 (RM169,060).

Aayog did not respond to an email seeking comment. Ministries that Tesla wrote to included the transport and heavy industries ministries, which did not immediately respond to a request for comment.

The Indian market for premium EVs, indeed for electric cars in general, is still very much in its infancy with vehicles far too costly for the average consumer and very little charging infrastructure in place. Just 5,000 of the 2.4 million cars sold in India last year were electric and most were priced below US$28,000 (RM118,342). Daimler’s Mercedes Benz began selling its EQC luxury EV in India last year for US$136,000 (RM574,804). ― Reuters

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