WINGS & WHEELS | A divided house over Tesla’s clarion call on import duties

Even before making its India entry, Tesla is making noises to attract attention, a trait Tesla’s boss Elon Musk is known for. 

Seeking a cut in import duty on its highly expensive electric cars, Tesla has once again ignited a debate on the import duty on cars. 

However, this time the debate is limited to electric cars and the auto industry in India is divided over Tesla’s demand. 

In response to an Indian’s request to launch electric cars, Tesla’s high profile boss Elon Musk tweeted “We want to do so, but import duties are highest in the world by far of any large country! Moreover, clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India”. 

By doing so Musk is lobbying hard for low duty on the import of electric cars. Hyundai India boss MD S S Kim has also backed Elon Musk’s call to lower the duties as it will help grow the EV market. 

However, the founder of India’s Ola, Bhavish Aggarwal was quick to dismiss these demands. Expressing his views, Bhavish tweeted “Strongly disagree with both. Let’s have confidence in our ability to build indigenously and attract global OEMs to build in India, not just import. We won’t be the first country to do so!” 

By opposing Tesla and Hyundai’s demands on cutting down on import duties, Ola is championing the cause of India’s ‘Make in India’ scheme. 

Ola has recently ventured into the electric mobility space. It is setting up India’s largest electric vehicle facility spread over 500-acre in Tamil Nadu’s Krishnagiri. Here it is planning to make 10 million vehicles annually something which is music to the ears of the present government. 

Ola also recently opened bookings of its e-scooter at Rs 499, garnering over 1 lakh bookings in advance.

Tesla, on the other side, has been talking about its intention to Indian market for years but it is only in the recent past some serious activity on its entry is visible as the U.S based EV maker has registered its offices, hired few top employees and even vehicles have been imported for homologation. 

Still, sometimes it feels like Tesla is looking for something more as even the high-end luxury car market is still very small in India. It is in this market and to the prospective owners of Mercs, BMWs and Audis, Tesla would like to sell its ultra-expensive cars. 

But other luxury car players are also not sitting silent. India has recently seen a flurry of launches in electric vehicle space, for those who can afford these electric luxury SUVs costing upwards of Rs 10 mn or $134,000. Last week Audi launched the e-tron in India at a starting price of Rs 99.99 lakh (ex-showroom) along with its entire SUV range including the e-Tron 50, the e-tron 55 and the e-tron Sportback 55. Much before that Mercedes-Benz launched its luxury electric SUV EQC and Jaguar launched its i-Pace in the same price bracket. 

Government as expected is also not in a mood to give sops to import of hi-end electric cars, they don’t get anything from it. The Indian government has indicated it is interested in giving concessions only if Tesla starts manufacturing cars. 

Also, for an electric car market contributing to just around 5,000 units including affordable e-hatchbacks out of around 3 million cars sold annually in India, the sops don’t make sense at all. 

Sops or concessions if any should be given to e-scooters or those at the bottom of this e-pyramid and not those at the highest level of the vehicle market unless they are ready to invest first to create jobs and facilities.

(Disclaimer: The views of the writer do not represent the views of WION or ZMCL. Nor does WION or ZMCL endorse the views of the writer.)