A few months ago, the most valuable EV brand in the world, Tesla, was planning to invest in India. In April, the company’s CEO, Elon Musk, announced his plans to visit the subcontinent and meet the Indian prime minister, Narendra Modi.
Further, it was also speculated that the company’s entry into the country could bring the largest foreign direct investment, booming the EV industry. However, due to some commitments, Musk deferred his visit, which was attributed to focusing on the Chinese market.
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Tesla Is Reportedly Facing Capital Issues
Now, according to a new report by Bloomberg, Tesla has paused its plans to foray into India, at least for the foreseeable future. Apparently, the company’s officials have paused all communication with Indian officials.
The report cites Tesla’s current capital issues as the main reason behind deferring the entry into the Indian market. To provide some context, the company has been witnessing a decline in sales and increased competition from Chinese manufacturers (which happens to be one of its key markets).
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The EV-Maker’s Foray Could Have Brought $3 Billion To The Indian EV Industry
According to an old report from Business Today, Tesla was considering investing about $3 billion (roughly Rs. 24,000 crore) to set foot in the country. The efforts to enter the market picked up momentum after the Indian government announced a new EV policy, which offered import duty concessions for companies that invest at least $500 million in setting up manufacturing units in India.
However, as Tesla witnesses its second consecutive quarterly drop in sales (and deliveries), the company isn’t in a position to plan fresh investments. Recently, Tesla has cut its staff, announced price reductions in key markets, and delayed a new plant in Mexico; all these developments could be attributed to the drop in demand and, subsequently, sales of electric vehicles.
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Indian Government To Focus On Local EV Manufacturers
Following the developments and Musk’s deferred visit to India, Tesla’s officials haven’t reconnected with New Delhi, which signals capital issues and a loss of interest in expanding into new territory. Instead, the Indian government will focus on local manufacturers, such as Tata Motors and Mahindra, to boost the country’s production of EVs. However, if Tesla plans to re-enter the country, it can still benefit under the new import tax and EV policy.
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