Tesla will not make cars in India, Tweets Elon Musk

by 5paisa Research Team Last Updated: Dec 15, 2022 - 05:15 am 26.8k Views
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At a time when important decisions are increasingly being communicated via Twitter, Elon Musk tweeted indicating that Tesla would not manufacture cars in India, unless allowed to first sell imported cars here. Only after that would Tesla consider setting up a manufacturing base in India. Interestingly, Elon Musk, the founder of Tesla Cars, is also making mega plans to take over Twitter, the world’s most popular opinion forum.

It was a tweet by Elon Musk in response to a query about setting up a manufacturing base for Tesla in India. Elon Musk was rather categorical tweeting that "Tesla will not put a manufacturing plant in any location where they were not allowed to sell and service cars first." It was almost like a pre-condition to setting up base in any country. Indian government has been lobbying hard with Tesla to set up manufacturing base in India.

Some time back, Tesla had indicated that his plans to set up manufacturing base in India was caught up in regulatory and policy related hassles. The indication was clearly that Tesla expected a lot more of concessions of the nature that China was offering to them. Tesla is one of the most valuable companies in the world and Elon Musk is the richest man on the face of the earth. The story has an interesting background.

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Back in April 2022, India’s Union Minister for Road Transport and Highways, Mr. Nitin Gadkari, had said that he was willing to roll out the red carpet for Tesla to make cars in India. However, he had also added that the Indian government would not be favourably disposed towards Tesla building its cars in China and selling in India.

That was not in sync with the make in India plans or in sync with the rationale of the PLI scheme. Tesla had also highlighted that compared to China the extant duties were too high in India. Interestingly, in India automobiles attract the peak rate of GST at 28%, almost at par with non-merit goods like cigarettes.

Gadkari had also highlighted that India had the necessary manpower capabilities as well as a network of vendors to help reduce the costs. However, he had made a manufacturing base in India a pre-condition to sell Tesla cars in India. 

India wants a situation wherein Tesla makes cars in India and uses India as an export base for the rest of the world. That is something the likes of Hyundai and Suzuki have been doing quite successfully. Gadkari had also underlined that India was a huge market and had also promised to make world class infrastructure like ports available for their exports.

The issue is about jobs. India would not be comfortable with a situation wherein India provides its lucrative automobile market but the jobs get created in China and the revenues get generated there. Incidentally, Tesla has already set up its India subsidiary in Bengaluru. Musk has two conditions. Firstly, India needs to reduce the cost of importing electric vehicles. Secondly, India must not insist on manufacturing in India.

Musk has also made a bid to take over Twitter for $44 billion. However, the deal is still in a state of limbo after the shareholders of Twitter have sued Musk for manipulation of the stock price of Twitter in the last few weeks.

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