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Tesla puts India entry plan on hold after deadlock on tariffs

Reuters

Tesla Inc has put on hold plans to sell electric cars in India, abandoned a search for showroom space and reassigned some of its domestic team after failing to secure lower import taxes, three people familiar with the matter told Reuters.

The decision caps more than a year of deadlocked talks with government representatives as Tesla sought to first test demand by selling electric vehicles (EVs) imported from production hubs in the United States and China, at lower tariffs.

But the Indian government is pushing Tesla to commit to manufacturing locally before it will lower tariffs, which can run as high as 100% on imported vehicles.

Tesla had set itself a deadline of Feb. 1, the day India unveils its budget and announces tax changes, to see if its lobbying brought a result, the sources with knowledge of the company’s plan told Reuters.

When Prime Minister Narendra Modi’s government did not offer a concession, Tesla put on hold the plans to import cars into India, added the sources, who sought anonymity because the deliberations were private.

For months, Tesla had scouted for real estate options to open showrooms and service centres in the key Indian cities of New Delhi, Mumbai and Bengaluru but that plan is also now on hold, two of the sources said.

Tesla did not respond to an email seeking comment.

An Indian government spokesman did not immediately respond to a request for comment.

Tesla’s price tag of $40,000 at minimum would put it in the luxury segment of the Indian market, where sales make up just a tiny fraction of annual vehicle sales of about 3 million.

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