- PM Narendra Modi will be in the US on a two-day visit and will meet Donald Trump. Will Tesla figure in the conversations?
Prime Minister Narendra Modi is scheduled to land in the United States this week where he will meet US President Donald Trump for the first time since he returned to the White House for his second term. While the topics of discussions are expected to range from defence and energy cooperation, issue of illegal immigration and H1-B visas, trade and tariffs will be in prime focus. And one company that may be keeping a close watch is Tesla.
The world’s largest maker of electric cars has been eyeing an India entry for years but high tariffs have been cited by CEO Elon Musk as a deterrent. In March last year, India reduced import tax on EVs to 15 per cent from a high of anywhere between 70 per cent and 100 per cent but on the assurance of local commercial manufacturing unit within three years. This was seen as a massive incentive for Tesla to finally enter India, only for Tesla to put plans on the backburner yet again. Will the plans now return to the action table?
Also Read : Whatever happened to Tesla’s India debut? A complete timeline
Trumping Trump not tempting
Trump began his second innings as US President on a fast and aggressive note in January, highlighting the need to impose retaliatory tariffs on goods imported from countries that impose ‘high’ tariff on American products. He is also pushing for local manufacturing, something he pointed to as recently as this week when he slapped 25 per cent tariff on steel and aluminium imports. “Our nation requires steel and aluminium to be made in America, not in foreign lands. We need to create in order to protect our country’s future,” Trump said as he signed the orders.
Also Read : When Elon Musk met PM Modi
These and similar words have ignited global concerns over trade wars. Trump wants to bolster local manufacturing and has specifically mentioned his support to the American automotive industry, a major job creating sector. On the other hand, he also says many countries are unfair when it comes to the export-import dynamics in their trade with the US.
India has already re-aligned tariffs on several key US imports and this includes tariff on high-end Harley-Davidson motorcycles. Will further tax cut for electric vehicles coming in via CBU route (Completely Built Unit) follow? Tesla may well want to know.
Who is wooing who?
India is the world’s third-largest market for vehicles, in terms of sales – behind China and the US. But its electric car market remains in a nascent stage in comparison. This year is likely to mark a major shift with Hyundai introducing Creta EV and Maruti Suzuki prepping its first-ever electric car in the form of e Vitara. Tata Motors too could drive out its Harrier EV while the luxury car makers are promising to expand their battery-powered offerings.
How will Tesla then place itself if and when it does touch down here? The most-affordable Tesla anywhere in the world is Model 3 which is priced at $44,000 (approximately ₹38 lakhs) in the US. Even with possible import tariff cuts, it will compete in the premium category – not mass-market segment – in India.
This effectively means that Tesla is unlikely to sell thousands of units in the country, not in its initial years anyway.
But Tesla’s entry may still put India firmly on the global EV map while potentially helping the American company with a solid base in South Asia.
So does Tesla also effectively need the Indian market? The company has carved out a sizeable lead against traditional automakers from German and Japanese strongholds. But the threat to its crown comes from China. BYD in particular is on a mammoth expansionist path and while it has not yet entered American soil, has managed to make significant inroads in Europe and South-East Asia while also being formidable in its home base of China. The comapny offers both plug-in hybrids as well as fully-electric models.
BYD has an India presence with models like Atto 3, Seal and eMax7, and will also soon launch its Seagull 7. All of these EVs are priced upwards of ₹25 lakhs. But it also has smaller offerings which could be brought to India in the times to come.
In a global race to be the biggest EV maker, every market of any significance is crucial and Tesla would want to woo Indians as much as India may likely woo Tesla still.
Check out Upcoming EV Cars in India, Upcoming EV Bikes in India.
First Published Date: 11 Feb 2025, 11:20 AM IST
