[TusharK]

Commerce and Industry Minister Piyush Goyal, recently paid a visit to Tesla’s manufacturing facility in Fremont, California.



During his visit, Goyal met with Tesla engineers and engaged with the company’s finance teams.

“Extremely delighted to see talented Indian engineers & finance professionals working at Senior positions and contributing to Tesla’s remarkable journey to transform mobility,” Goyal said.



“Also proud to see the growing importance of Auto component suppliers from India in the Tesla EV supply chain. It is on its way to double its components imports from India. Missed Mr @ElonMusk’s magnetic presence and I wish him a speedy recovery,” he added.

Following the minister’s visit to the factory, Elon Musk posted on X saying, “It was an honour to have you visit Tesla! My Apologies for not being able to travel to California today, but I look forward to meeting at a future date.”

Tesla is looking to tap into the growing EV market in India and has been seeking tax concessions to set up a plant in India. It is said that the government could reduce the import duty on green cars provided that the carmakers agree to manufacture their vehicles in India.

Link to Team-BHP News

[TusharK]

India mulls tax cuts on imported EVs for a period of 5 years

According to a media report, the Indian government is looking at allowing international automakers to import EVs on concessional duty rates.



It is said that the government could offer tax cuts on imports of completely built units (CBU) of electric vehicles for a period of up to 5 years. However, to avail of the tax cuts, manufacturers will have to commit to eventually building them in India.

The news comes at a time when Piyush Goyal, Minister of Commerce and Industry, is on a visit to the US to participate in regional trade meetings and woo investments from EV markers.

The minister also stopped by Tesla’s manufacturing facility in Fremont, California, where he met with engineers and finance professionals working in senior positions.

Source: Bloomberg

[qaqa]

I sincerely hope that this policy never sees the light of day. The proposal if implemented would likely lead to decimation of the nascent Indian EV indstry with not much to show for it. Some issues which cause me concern -

a. Not sure if CBU imports from only select countries would be WTO compatible. If you open up for US exporters (Tesla), you would also need to open up to SAIC, Geely and the like. India can try to impose non-tariff barriers like FDI restrictions, mandatory Indian certifications etc to make it harder for imports from our dear neighbor, but these restrictions will be leaky.

b. The Chinese manufacturers by their sheer scale, headstart and low cost of capital would have vastly lower production cost than India made EVs. Even after a 15% tax, the CBUs would be able to undercut Indian manufacturers. Please keep in mind that Indian manufacturers are still learning the ropes of EV production, and nowhere have comparable scales.

c. A "commitment" to commence local production in future is very difficult to impose, and there may be a number of creative work-arounds. If the commitment is not met (whether in substance or in form), at best the offending manufacturer can be blacklisted. The damage to the Indian industry would have been complete by then, and so blacklisting would be a case of closing the stable doors after the horses have bolted.

d. I really dont see much value addition by having a Tesla plant in India assembling cars from kits or components. What we need is local sourcing of components and basic parts so that the Indian vendor ecosystem for EVs is in place. Not sure if Tesla would do much of local procurement. Maybe instead of all of this song and dance, the Govt should focus on getting R&D centers for Tesla, GM etc being setup in India. It will atleast build a pool of highly skilled technical experts in India who can then be leveraged by Indian auto companies.

[aim120]

All of the current CBU, SKD and CKD EVs sold doesn't even cross a combined total of 1000 units a month, save for the MG comet.
Tesla Model Y at best will sell as much as the combined sales of Ioniq 5 and EV6.

The industry man hours it takes to build a average american IC powered car is 6.2 hours and it said that for a EV it drops to 3.7 hours, so it needs less people to make a EV.

With the level of automation Tesla uses, if Tesla manages to sell around 600 vehicles a month in India, that's not a huge deal of employment in a assembly plant.

Making Batteries and Motors are 90% automated, so making those in India won't be any cheaper. The only stage at which manufacturing a car in India will be cheaper is the Final Assembly line, since labor cost is cheaper in India compared to China.

So unless India becomes a HUB for RHD exports, Tesla plant in India doesn't make sense. Also the supply chain for EV doesn't exist like rare metals, semiconductors, battery cell plants.

[sandeepmohan]

Originally Posted by qaqa

I really dont see much value addition by having a Tesla plant in India assembling cars from kits or components. What we need is local sourcing of components and basic parts so that the Indian vendor ecosystem for EVs is in place. Not sure if Tesla would do much of local procurement.

Isn't that how all Euro manufacturers setup shop in India? They started with assembly and now their engines are Made in India! That can't be bad for India right? In fact, it shows what we can do.

Local sourcing or procurement of components will not happen tomorrow. It will take time.

We do not have the technical know-how to build our own Tesla. We can always learn and the one way to do that is allow for Industry leaders to setup shop. I see this as job creation and a chance for our Engineers to learn.

As a Business, you want to make money and I get the feeling that if India gets access to a brand like Tesla, we will lap them up like candy. It is very clear that we want the best there is. Not some EV strapped with Duracell batteries.

I am not averse to any of the Chinese manufacturers either. If they have a sound, well engineered product, I don't see why we should stop them from selling and building cars in India.

[Bhodrolok]

Good move!

The EV situation in India needs a kick on the backside to get moving. Our EV vehicle as well as infra is abysmal and needs competition to drive it.

[sgmuser]

Looks like this policy is designed for Tesla specifically which is dangerous. Thinking that Chinese (Geely and umpteen other Chinese EV makers) will use this to enter India if not already is not correct. Tesla has bets big on its collabs with Chinese component makers, so, those guys (components supply chain) will try to extract as much as possible even if Chinese EV makers are excluded from this policy. I am not sure what we should say as a potential customers of EVs. I do not think this will be looked upon nicely by other Japanese makers like Suzuki or Toyota who does not have even one EV yet on road here in India. For low and mid end buyers this will not make immediate impact with existing custom regime. The luxury car buyers will buy these to show off as the economy of buying EV easily nulled with the custom duty and the Premium Name plate only exists. I wonder what is the use of this.

[Contrapunto]

This is a good move. Let me reason this out my way

1. It’s not a question of “this OR that”. India needs to develop R&D skills, design/ industrial aesthetics, automotive software capabilities as well as manufacturing heft.
2. However, the manufacturing ecosystem is still immature. Here it becomes a matter of taking bets. if we protect and mollycoddle the industry too much, it will always remain second-rate and (relatively) inefficient. We tried this protectionist logic all through the decades of 60s- 90s. Did not work. Sure we will be swamped in some areas, but we will also develop competencies and advantages in other areas. In spite of the current direction of fragmentation of world trade, it will swing back to the middle. We will have to collaborate as well as compete and it will be our relative strengths that will provide competitive advantages.
3. Now let’s look at it from a purely business point of view. A truly large-scale greenfield auto plant will take 3-4 years to be fully productive. What does the brand do till then? They need to develop dealer network, service partners, supply chain partners etc…who need something to sell for the virtuous cycle to restart. This is where the 5 year import flexibilities come in.
4. Some incumbents like Hyundai/Kia, Suzuki and Tata will of course have an advantage. But if I was the government, I would aim to make the market more competitive and invite other players like VinFast and Rivian (however expensive it is), component makers like LG Chem and CATL, maybe even industrial equipment OEMs like Idra (gigacasting), Kuka, Kawasaki Robotics etc.

Coming to China, we just have to humbly accept that we missed the bus fifteen years ago, and learn from China , collaborate and compete and go up the ladder of industrial maturity. We would be living in a fool’s paradise if we ignore the obvious and refuse to draw the right lessons from it.

One final point, all conversations on EVs focus almost exclusively on passenger vehicles. However the addressable market is much, much larger. It covers everything from small-to-large vans, mini-to-full-seized bus, trucks of various sizes, indoor and outdoor robots, autonomous mining and factory equipment, cranes and other port equipment- pretty much anything that needs “motive power”.

Three cheers to a different future. While it does look like a “Tesla Policy”, as a (somewhat) industry insider, I can assure you its much, much larger in scope than that.

[lina]

This does not make sense. We already have companies bringing in cars via CKD, CBU etc. These companies (Merc/Hyundai/VW/BYD) have invested in India. Do the same.

Incentivise cell and battery manufacturing if anything. Currently this is almost fully concentrated in China with little competition from Korea and USA.

[Sandy Damodaran]

This is a great move! Hope it gets more companies in India with their vehicles. No amount of shielding will get Indian manufaturers to give niggle free products. We saw that during the Era of Ambasaddor's and PAL. Seeing it now with Tata and Mahindra's.

Not even their greatest fans would call Tata and mahindra vehicles free of issues, specially their EV's.

[payeng]

Originally Posted by Sandy Damodaran

Not even their greatest fans would call Tata and mahindra vehicles free of issues, specially their EV's.

Don't know about others but my Initial (1 month) experience with my Tiago EV has been FREE OF ISSUES so far.

[dsuman]

This looks like a policy introduced to woo Tesla since they have been apprehensive about setting up shop in India without testing waters first. Discussions are ongoing for 2 to 3 years now.

This seems a good policy to allow Global EV Manufacturers to gauge the Market. This will encourage Global EV models to be brought to India. Adoption on big scale will encourage companies to Build here. This is like sowing seeds to become future Manufacturing Hub. I believe our homegrown manufacturers will not be impacted. The price of a CBU though getting taxed lesser will still be pricey compared to say a Nexon EV or a Tiago EV in their respective categories. CBUs can never match the price of homegrown EVs unless Base price is set drastically low.

Tesla selling in India will encourage others. I believe this the Microsoft moment of early 2000 that happened in Hyderabad. Since Microsoft built its largest DC (outside USA) in Hyderabad, many IT companies made Hyderabad a Global IT Hub.

Let's Welcome the Future prospects with open hands

[GoBabyGo]

Hi, I am hoping GOI is doing similar strategy adopted to bring Apple manufacturing in India. It may not be as slow as Apple who took over half a decade to set up their manufacturing in India. Tesla may not take that long and hopefully start manufacturing in India by 2026 or early 2027.

I think initially Tesla will bring made in China Tesla models in India to compete with 60 lacs+ ex showroom priced cars from other manufacturers then once Tesla understand our market and streamline their supply chain, eventually they will set up their manufacturing facility in India. I am expecting that in next 2 years Tata will start their EV battery plant in India and then we can see both Tata-Mahindra flagship EV & Tesla budget EV at 20 lacs.

I don't know how Tesla will help EV vehicles in India, but tax cut on imported CBU EVs will surely help bringing less expensive EVs in India by BYD, MG etc.

[payeng]

Originally Posted by GoBabyGo

I don't know how Tesla will help EV vehicles in India, but tax cut on imported CBU EVs will surely help bringing less expensive EVs in India by BYD, MG etc.

Wasn't Tesla responsible for improving the EV Tech coming out of China and developing the Vendor base?

[Tanmay_868]

I want to know the outcome of the following policy.
So can we expect any new EV launch in sub ₹25 lakhs.
Also will the price of existing EV in India (particularly Nexon ev) reduce? Asking since we are planning to add a Nexon ev in our garage soon but can wait if any new exciting option comes up in a year or so