Tesla won’t set up manufacturing plant in India until allowed to first sell and service cars, Elon Musk says

Tesla won’t set up a manufacturing plant in India until it is first allowed to sell and service imported cars in the South Asian nation, the carmaker’s chief executive Elon Musk said Friday, more than a year after an Indian state said that the electric carmaker was planning to open a plant in the southern part of the country.

Responding to an individual on Twitter, who had asked for an update on Tesla’s manufacturing plant in India, Musk responded, “Tesla will not put a manufacturing plant in any location where we are not allowed first to sell & service cars.”

Tesla and the Indian government have been engaging for more than two years to evaluate a pathway for the electric carmaker to enter the world’s second most populous nation but are stuck in a deadlock.

The Indian government has insisted that Tesla commits to opening a manufacturing plant in the country, so that it can assemble cars locally in the nation, and follow high import duties until it does if it wishes to sell its vehicles.

The U.S. firm, on the other hand, is seeking lower import taxes in India so it can first test the market by selling cheaper imported electric vehicles before committing to a manufacturing base.

Tesla incorporated a subsidiary in India early last year and registered an office in the city of Bengaluru in Karnataka. The Southern Indian state of Karnataka said shortly afterwards that Tesla “will be opening an electric car manufacturing unit in Karnataka.”

But the two are now at a standstill.

“If Elon Musk is ready to manufacture Tesla in India, then there is no problem,” India’s Road Transport Minister Nitin Gadkari said at an event last month. But manufacturing cars in China and selling them in India is not a “good proposition,” he added.

Several global brands, including Mercedes-Benz, BMW, Toyota and Hyundai have expanded their businesses in India in recent years.

In a tweet earlier this year, Musk said that Tesla was “still working through a lot of challenges with the government.” Audi has expressed similar concerns.

Several Tesla executives in India were recently reassigned to focus on Indonesia and other Asian countries, newspaper Economic Times reported earlier this month.

In a separate tweet, Musk disclosed to another user that SpaceX was waiting for approval from the Indian government for launching Starlink in India.

The company had hired Sanjay Bhargava, a former PayPal executive, to lead Starlink’s operations in India last year. He said that the firm, which had briefly started taking pre-orders in India, planned to deploy more than 200,000 active terminals in over 160,000 districts in India by the end of December 2022.

Bhargava stepped down from his role weeks after New Delhi ordered the SpaceX division to stop taking orders for the devices, as it doesn’t have the license to operate in the South Asian market.