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Four Tesla models approved by the Centre: What does it mean for the EV maker?

This approval does not mean immediate launch of the EV. A few roadblocks lie ahead
Last Updated 01 September 2021, 10:44 IST

Electric car maker Tesla took a step closer to the Indian auto market as the Centre approved four models to be imported in the country. While the Tesla fans in India are excited, this does not mean an immediate launch of electric cars in India.

It is not yet known which models have received the nod, though they are widely expected to be Model 3 and Y variants.

Even before finalising its plans to come to India, Tesla had been wary of India’s high import costs. Its discussion with the government still continues as the carmaker has been asking the government to cut import duty for electric vehicles.

Tesla may import fully built models when it sets up operations as India levies as much as 100 per cent import tax on fully built vehicles. Knocked-down units attract a lower import levy.

India wants to see if cutting costs for Tesla will help the local manufacturing industry in any way. Therefore, it has asked Tesla Inc. to ramp up local procurement and share detailed manufacturing plans before its demands for lower taxes on electric vehicles are considered.

California-based Tesla wrote to the Modi government in July asking for the import duty on electric cars to be reduced to 40 per cent from the current 60 per cent to 100 per cent. The company also asked for a 10 per cent social welfare surcharge.

Another hitch is the size of the EV market in India. Tesla is vying for a share of the market where premium carmakers Mercedes Benz and Audi have already launched their electric models by importing fully built units. It is noteworthy that these companies have also lobbied for lower taxes for years but faced resistance from Indian companies, constricting India’s EV production to around 35,000 units a year.

Mercedes and Hyundai are supporting Tesla in this bid, while Tata Motors and Ola, which has recently launched its electric scooters in India.

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(Published 01 September 2021, 07:29 IST)

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