Tesla's plans to enter the Indian market appear to have hit a roadblock, with executives from the electric vehicle manufacturer reportedly ceasing communication with Indian government officials, according to sources familiar with the matter.
The apparent cooling of interest follows Elon Musk's postponement of a planned visit to New Delhi in April. During this visit, many had anticipated the announcement of significant investments in India, potentially including an electric vehicle battery factory. But instead, Musk was seen in China within a week.
Indian government sources suggest that Tesla may lack the working capital necessary for substantial investments in the country and is unlikely to commit to fresh ventures in India in the near term.
This development comes at a challenging time for Tesla globally. The company has experienced two consecutive quarters of declining deliveries, facing increased competition in the crucial Chinese market from domestic electric vehicle manufacturers. In April, Musk announced job cuts at Tesla, while production of its latest model, the Cybertruck, has been slow to accelerate. Additionally, construction of Tesla's planned factory in Mexico has been delayed.
The Indian government had recently announced a reduction in import taxes on electric vehicles for foreign carmakers pledging investments of at least $500 million and committing to commence local production within three years. However, with Tesla's apparent withdrawal, the government is now focusing its efforts on supporting domestic manufacturers such as Tata Motors and Mahindra & Mahindra to boost electric vehicle production.
Tata Motors has several electric vehicle models in development, while Mahindra is set to launch its first purpose-built electric vehicles in August, utilising technology sourced from the Volkswagen group.
Despite the setback, Indian officials maintain that they would welcome Tesla should the company choose to re-engage. The electric vehicle market in India remains small, with battery-powered cars accounting for just 1.3 per cent of vehicles on the road. Consumers continue to be wary of high entry costs, limited charging infrastructure, and concerns about battery longevity.
However, the sector is showing signs of growth, particularly in public transport. Ride-hailing services such as BluSmart and Evera are increasingly adopting electric vehicles manufactured by local companies, potentially paving the way for wider acceptance and adoption of electric vehicles in India.
