Tesla's Indian Overdrive: Elon Musk's EV Giant Seeks Short-Term Tariff Relief for Manufacturing Hub

This story was first published by the Benzinga India portal.

In a strategic move, Tesla Inc. TSLA, led by Elon Musk, is negotiating with the Indian government for a conditional, short-term reduction in import tariffs on electric vehicles (EVs). This comes as the EV giant explores the possibility of setting up a manufacturing hub in the subcontinent.

According to the details, Tesla has offered a proposition for a conditional tariff reduction to tackle India's hefty customs duty. The current rate is 70% for vehicles under $40,000 and a whopping 100% for those priced higher.

See Also: Tata Finally Wraps Up Wistron Acquisition To Become First Indian Company That Makes iPhones

Sources privy to these discussions, as cited by a report in India's Financial Times newspaper, have revealed an interesting aspect of Tesla's proposal. The company's request includes a "sunset clause," suggesting the tariff relief period would be finite. If approved, the proposed concession could bring down tariffs to 15% for all EVs, regardless of their price tags.

However, this proposal is still under discussion within the Indian government.

Tesla's proposal doesn't exclusively favor the company, but it would be applicable to all EV manufacturers, aligning with India's broader objective of promoting an EV-friendly environment without biases. This potential tariff reduction is part of a more extensive plan aimed at making India an appealing destination for EV production, bringing benefits to both the country and the companies involved.

On a broader scale, Tesla's interest in India aligns with its global expansion strategy. The company has indicated its capability to produce a vehicle priced under $30,000 in India for both domestic sales and potential exports. Such a move could designate India as a crucial hub in Tesla's rapidly growing production network, which aims to achieve an impressive target of 20 million cars annually by the decade's end.

The global automotive industry, along with market observers, is keenly watching India's reaction to this proposal. The decision could significantly influence India's blossoming EV market and its standing in the global automotive realm. It may also affect India's trade relations, especially with countries like the U.K., which are currently advocating for lower car tariffs in ongoing trade talks.

Read Next: Amazon's Great Indian Festival Marks Record-Breaking 110 Crore Visits: Here's What Sold Most