Tesla likely to import cars from Germany in intial phase to enter Indian market: Report

Citing reliable sources, Moneycontrol reported that the Elon Musk-led firm has been discouraged by Indian government officials to import any car manufactured in its Shanghai gigafactory in China.

According to the report, the imports will be made for the initial phase of Tesla’s foray into the Indian market.

However, Tesla is still tight-lipped about the timeline for its India venture.

“Due to geopolitical tensions between India and China, the top management at Tesla has been categorically told by the ministries not to import any car from the world’s largest EV market. Moreover, Indo-German ties on multiple disciplines have been inked earlier and the US EV maker is encouraged to leverage the same,” a source working in an advisory capacity with the company told Moneycontrol on condition of anonymity.

Tesla Inc has allocated €5 billion for the establishment of a gigafactory in Brandenburg, Germany, marking its inaugural facility in Europe. This plant will produce the Model Y Crossover, with plans for a capacity increase of an additional 1 million units annually. Recent reports indicate that the company is considering the launch of a €25,000 car (around Rs 20 lakhs) in the Indian market, the report said.

However, according to CNBC-TV18, sources have stated that discussions regarding potential customs duty concessions for Tesla are speculative, and no formal decision has been made in this regard.

Currently, India enforces a 100 percent customs tax on imported cars (regardless of powertrain) with a Cost, Insurance and Freight (CIF) value surpassing US$ 40,000. For vehicles with a CIF value below $ 40,000, a 60 percent import duty is applied.

According to an undisclosed informant cited by Moneycontrol, Tesla is pressing hard for a decrease in customs duty on imported electric vehicles in Completely Built Up (CBU) condition from Germany. The source also indicated that the government seems receptive to the proposal, considering the presence of numerous high-end car manufacturers like Mercedes, BMW, and Audi, which are headquartered in Germany.

“Tesla was seeking concessions on the import of electric cars from other countries. So models brought in as Completely Built Up (CBU) from Germany can be slashed by 20-30 percent which will be a boon not only for Tesla, but other luxury carmakers based there, such as Mercedes, BMW, Audi, etc.,” said the source, reported Moneycontrol.