Tesla, the American electric vehicle and clean energy company, is likely to open a factory in India if it is successful with imported vehicles, according to Chief Executive Mr. Elon Musk, after the company wrote to Indian ministries requesting a big reduction in electric vehicle (EV) import charges.
However, Indian Prime Minister Narendra Modi’s administration, which has championed high import duties for many industries in order to stimulate local production, is expected to oppose it.
Other luxury automakers in India have also requested the government in the past to decrease import taxes, but their efforts have failed miserably due to opposition from domestic rivals.
“We want to do so, but import duties are the highest in the world by far of any large country. Moreover, clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India. But we are hopeful that there will be at least a temporary tariff relief for electric vehicles. That would be much appreciated.”
According to sources, Tesla, which has planned of establishing sales in India this year, suggested in a letter to ministries and the country’s leading think tank, Niti Aayog, that lowering federal taxes on fully finished electric cars to 40 percent which is contrast with current rates of 60 percent for cars priced below $40,000 and 100% for those above $40,000.
According to Tesla, only one model, the Model 3 Standard Range Plus is priced under $40,000.
The Indian market for luxury electric vehicles is still in its initial stages, with vehicles that are much too expensive for the average consumer and a lack of charging infrastructure. Only 5,000 of India’s 2.4 million cars sold in last year, were electric with the majority costing less than $28,000.
Earlier this year, India’s transport minister, Mr. Nitin Gadkari, told in a statement that the country would be willing to provide incentives to ensure Tesla’s cost of production in India is lower than that in China, but only if the company manufactures locally.
Related: Tesla may join forces with Tata Power for charging facilities in India: Sources