Tesla is pressuring India to sharply cut import taxes on electric vehicles – sources

A Tesla logo is pictured on a car in the rain in the Manhattan neighborhood of New York, New York, the United States, on May 5, 2021. REUTERS / Carlo Allegri / File Photo

NEW DELHI, July 23 (Reuters) – Tesla Inc (TSLA.O) has written to Indian ministries asking for a significant reduction in import duties on electric vehicles (EVs), a move it says will boost demand and will generate revenue for the government, two sources with knowledge of the matter said.

His speech, however, is likely to meet resistance from the administration of Prime Minister Narendra Modi who has championed high import taxes for many industries in an attempt to boost local manufacturing.

“We want to do it, but import duties are by far the highest in the world of any major country,” Tesla chief executive Elon Musk said on Twitter in response to a tweet about the launch of the company cars in India. (https://bit.ly/2WfUrEw)

“But we’re hoping there will be at least temporary tariff relief for electric vehicles,” Musk added.

Other luxury automakers in India have also lobbied the government in the past to reduce taxes on imported cars, but have had little success due to opposition from rivals with domestic operations.

Tesla, which aims to start sales in India this year, said in a letter to ministries and the country’s leading think tank, Niti Aayog, that a reduction in federal taxes on imports of fully assembled electric cars to 40% would be more appropriate, according to the sources. .

This compares to the current rates of 60% for cars priced under $ 40,000 and 100% for those priced over $ 40,000.

“The argument is that with a 40% import duty, electric cars may become more affordable, but the threshold is still high enough to force companies to manufacture locally if demand picks up,” said one. sources. The sources declined to be identified because the letter was not made public.

According to Tesla’s US website, a single model – the Model 3 Standard Range Plus – costs less than $ 40,000.

Niti Aayog did not respond to an email seeking comment. Ministries Tesla wrote to included the transport and heavy industries ministries, which did not immediately respond to a request for comment.

The Indian market for high-end electric vehicles, if not electric cars in general, is still in its infancy with vehicles far too expensive for the average consumer and very little charging infrastructure in place.

Only 5,000 of the 2.4 million cars sold in India last year were electric and most were priced under $ 28,000.

Daimler’s Mercedes Benz (DAIGn.DE) started selling its luxury electric vehicle EQC in India last year for $ 136,000, and Audi this week launched three electric SUVs with sticker labels that start at around 133,000. $.

While the tariff cut would give Tesla a better chance to test the market, its plan to start sales in India does not depend on a change in government policy, the two sources said.

Tesla registered a local business in India in January and stepped up local hiring while searching for showroom space. Read more

Indian Transport Minister Nitin Gadkari told Reuters in March that India would be willing to offer incentives to ensure that Tesla’s cost of production in the country is lower than that of China, but only if it manufactured locally. Read more

(Refiles to correct name in paragraph 3 to Elon Musk)

Report by Aditi Shah; additional reports by Chavi Mehta; Editing by Edwina Gibbs

Our Standards: Thomson Reuters Trust Principles.

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