Tesla Inc. CEO Elon Musk announced a surprise change of plans Saturday postponing his much-anticipated India visit barely a day before he was expected to meet Prime Minister Narendra Modi and interact with Indian space technology start-up founders.
Musk was expected to announce his investment plans in India, a month after the Union Government released its new Electric Vehicle (EV) policy that opened the doors for the world’s most valuable automaker to import cars into India at lower duties amid expectations that this could help foster an EV ecosystem in the country.
“Unfortunately, very heavy Tesla obligations require that the visit to India be delayed, but I do very much look forward to visiting later this year,” Musk said in a social media post. Earlier this month, Musk, in a post on X, wrote that he was looking forward to meeting with Prime Minister Modi.
While Musk did not elaborate and there was no comment from the nodal ministries coordinating his visit, the Tesla CEO’s decision to postpone his visit comes ahead of the company’s quarterly results announcement Tuesday where he’s expected to address key issues faced by the company, including the competitive challenge from Chinese EV manufacturers and dwindling Tesla sales.
Tesla shares have declined 40 per cent this year with the company on track for its slowest quarter since 2022, impacted by lower production and deliveries. The steady slowdown in EV demand across key markets, including North America and western Europe, has flagged the overcapacity problem at Tesla factories, including those in Shanghai and Berlin. Incidentally, the slowdown is not limited to Tesla alone. In October, General Motors (GM) announced it would cut production of EVs while in January this year, Ford slashed production of its electric pickup truck by half.
Ahead of Musk’s visit, policymakers had kickstarted the consultation process last week to release guidelines for the EV policy. Musk’s decision also comes amid ongoing deliberations between Tesla representatives and policymakers in New Delhi over the issue of the company offering a firm commitment on its investment plans, even as it has secured a deal to import car into India at sharply reduced duties.
New Delhi remains optimistic about Tesla’s arrival in the country and its potential to boost EV manufacturing. Hours after Musk announced that he is postponing his visit to India, Union Finance Minister Nirmala Sitharaman said in Ahmedabad that India is making policies to ensure big companies are attracted to India for investment, especially in light of industries expressing concerns around China.
“When big companies show interest in coming to India, we certainly make sure to make it attractive for them to invest, so in that process, if there’s something to discuss, we’ll certainly discuss, but whatever we do, we have done it through policy, and it has helped. Especially after China started being a concern for many industries or many experts in domain areas, we have made policies in such a way that we are making India an attractive destination, both for manufacturing and for services,” said Sitharaman addressing a press conference in Ahmedabad Saturday.
Space to broadbase norms
A delayed visit would give more time to policymakers to broadbase the guidelines for new EV norms to effectively ensure that the benefits from relaxed import duties can be leveraged by a greater number of players and help enrich the domestic EV ecosystem.
To attract investments into the EV space, the Centre has lowered import duties to 15 per cent from 100 per cent for models of electric cars with a combined cost, insurance, freight prices of $35,000 or above for five years, a key precondition for Tesla’s entry to test out the “market potential” in India.
Tesla’s likely entry into India will come after the Centre is learnt to have turned down China-based BYD’s proposal to build a $1-billion EV plant in partnership with Hyderabad-based Megha Engineering and Infrastructures Ltd last year in June. The rejection of the proposal was in line with India’s broad policy to filter Chinese investments in crucial sectors in India.
A vibrant EV ecosystem is part of India’s policy push to help reduce extreme dependence on imported crude oil. India’s oil import dependency for FY24 climbed to 87.7 per cent from 87.4 per cent in FY23, as per official numbers. Cutting costly oil imports continues to be a key focus area for the government, and it even found a mention in the BJP manifesto for the 2024 polls.
A similar strategy was seen in the case of mobile manufacturing where Apple and other global mobile phone manufacturers are receiving incentives under the Production Linked Incentive Scheme (PLI) to begin making phones in India and help create a broader manufacturing base in the country.
