Tesla Eyes India
It looks like Tesla is ready to try to find a way into the Indian market again, after over a year spent cooling down from negotiations that ended around January 2022.
On May 16th, Tesla reportedly sent a team of c-suite executives and managers to re-open negotiations. Comments from Indian ministers taking part in the talks reveal that Tesla is looking to make a manufacturing base in the South Asian country - but Tesla itself hasn’t commented just yet.
So even with the ministerial comments, there’s no way of knowing how well those talks are proceeding - but we know that this time, Tesla wants to land a deal - not just because Indian officials are saying so, but because they’re having this conversation at all.
When talks stalled last year, it was because the two sides had reached an impasse - both of them wanted something that the other couldn’t agree too. Namely, Tesla wanted the Indian government to relax their very high import duties so they could test the local market’s appetite for their product - imported EVs with a price tag higher than $40,000 USD could reportedly face an import duty of as much as 100%!
For their part, India was willing to at least lower those fees - provided Tesla would commit to building a factory there before doing so. The stalemate forced the parties to abandon talks in early 2022.
On the one hand, you can definitely see where India is coming from. Their job is to bring in business while protecting their markets from potentially predatory foreign companies. If they lowered tariffs and Tesla became popular, there wouldn’t be any guarantee that the company would stick around - and in early 2022 the Indian government could be forgiven for thinking Tesla was just trying to get a foot in the door, rather than wanting to actually invest in India.
Last year was full of reports of Tesla executives meeting governments across the world. Rumours of new facilities being discussed in Indonesia, Canada, and Mexico were very public - and Tesla did eventually choose Mexico for its new Gigafactory.
But Tesla’s vehicles certainly wouldn’t be as popular if they were double the price either - a 100% tariff hanging over a company’s head is more than unreasonable when trying to negotiate for a new partnership.
That said, Tesla returning to the table tells us something crucial - they want India. Centrally located in Asia, with a decent trade infrastructure and a large population - India is an ideal manufacturing base to spread Tesla’s cars across South Asia - so ideal that they’re willing to give talks another shot rather than just calling up Indonesia for instance, and accepting their offers.
But even if these talks go well, Tesla has another problem - Climate change is quickly making India uninhabitable.
The Intergovernmental Panel on Climate Change has given some dire warnings about the livability in places like India inside the next couple of decades. Last year alone, more than 5000 people died due to intense heat waves across India - with temperatures reaching as high as 50 degrees celsius.
That being said, this could be a unique opportunity for Tesla to help.
Like in other places the company sets up shop - Tesla could decide to strengthen the local power grids. They did this in California, and Texas, and they’ve hinted at doing the same in Mexico. All of these locations benefit from a huge Tesla megapack facility - and yes most of that power goes to the factories there - but in a country like India, it would make a lot of sense for Tesla to invest in supporting local communities so people could live where the company intends to hire their workers, and sell their vehicles.
Hopefully the two parties are able to come to an agreement that makes everyone satisfied - but if they can’t, Tesla isn’t exactly suffering for lack of choice in South Asia.