India’s Union Road Transport and Highways Minister Nitin Gadkari said on Monday, May 2, that Tesla would get benefits if it manufactures vehicles in the country.
“Tesla makes its electric cars in India, and after that you will also get benefits,” Gadkari said.
The Minister of Transport has made other statements with similar sentiments in the past. On April 26, 2022, Gadkari said India had no problem with Tesla to manufacture electric vehicles in the country. However, he clarified that Tesla is prohibited from importing cars made in China.
“If Elon Musk is ready to manufacture in India, no problem. Come to India, start manufacturing. India is a big market. They can export from India,” the Minister of Transport said.
In 2021, Tesla sent a letter to India’s Ministry of Roads claiming that its 110% import tariff on vehicles with a customs value of more than $40,000 was “exorbitant” on zero-emissions vehicles. according to HindusTesla has asked the Indian government to standardize its electric vehicle tariff to 40%, regardless of the customs value. The electric car manufacturer also asked the government to withdraw the 10% welfare surcharge on electric cars.
In February 2022, India seemed more open to considering Tesla’s request for import tax cuts. According to a person familiar with the matter, the government was willing to grant tax breaks if the electric vehicle manufacturer bought $500 million worth of auto components from India.
Tesla’s factories rely on an integrated supply chain. In the case of Giga Shanghai, Tesla created a local supply chain that lowered costs. Elon Musk and CFO Zachary Kirkhorn also recently discussed rising logistics costs during their Q1 2022 earnings call.
“Yes. So, there have been some improvements inherent in the cost, as I mentioned, but there is also offsets that we talked about earlier on raw materials and goods. Outbound logistics is still a challenge despite a lot of efforts being made to increase capacity there and reduce these costs,” Kirkorn said.
Tesla is unlikely to import $500 million worth of auto components to build cars in other countries. Tesla Giga Berlin is likely to build its own local supply chain, such as Giga Shanghai.
For the idea of a giant Tesla plant in India, Elon Musk said the company would need to test demand in the country first through imports. However, importing heavily taxed vehicles may not provide Tesla with accurate data on demand in the country.
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