Tesla has halted plans to enter the Indian market after being unable to convince local officials to cut import taxes.
The electric car manufacturer was thinking about initially entering the Indian market by selling EVs imported from its facilities in the United States and China. Tesla had hoped of being able to do so at a lower tariff rate than normal but the Indian government was pushing the company to commit to manufacturing locally before it would lower tariffs, currently set as high as 100 per cent for imported vehicles.
Sources close to Tesla tell Reuters that the automaker put its plans on hold after February 1, the day India announced its budget and tax changes but did not offer any concessions to Tesla.
Read More: India Says No To Musk, Won’t Offer Tax Breaks On Imported EVs
It is understood that the car manufacturer had been scouting areas in New Delhi, Mumbai, and Bengaluru to establish showrooms and service centers. It also established a small team to work on a launch in India.
In April, Indian transport minister Nitin Gadkjari said that it would “not [be] a good proposition” for Tesla to import Chinese-built cars into India. This statement came after more than a year of lobbying from Tesla and chief executive Elon Musk to have local tariffs slashed.
Reuters notes that strong demand for Tesla’s vehicles in other markets also contributed to its decision to put the Indian plans on hold.
During the first quarter of this year, Tesla delivered 310,048 vehicles with 95 per cent of these being the Model 3 and Model Y, while the remaining cars sold were the Model S and Model X.
