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Which state will win the wooing game with Tesla in India?

If Tesla Motors wants to come to India, it must do so on our terms, according to a senior auto industry representative.

Elon Musk, the CEO of Tesla Motors, has spoken out against the high import tariffs that plague India’s auto industry. Musk’s recent tweet about the company’s challenges – which explains the delay in its entry – has elicited a bizarre response from various states.

  • States try to woo Musk to set up shop
  • Elon Musk has been asking for a reduction in import duties
  • Questions arise if Tesla should get preferential treatment

The governments of West Bengal, Telangana, Tamil Nadu, Maharashtra, Punjab, and Karnataka wasted no time in announcing that they were ready to roll out the red carpet for the San Francisco-based electric carmaker. It was unmistakably a sign of ferocious interstate competition to woo a top brand, akin to the 1990s.

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Tesla in India
Tesla in India

This time is different because the auto industry has matured and is ready to take on new challenges such as electric mobility. Companies like Tata Motors, Mahindra & Mahindra, Hyundai, MG Motor, and Mercedes-Benz, which have invested in electric mobility, have not received the same level of acclaim as Tesla, which is perplexing.

“I just don’t understand why India is so obsessed with Elon Musk,” a senior auto industry representative said. Except for a few hundred people who will buy a Tesla, his visit to India will have no impact. If he wants to visit India, he must do so on our terms, not his own.”

Boy on The Poster

Musk is unquestionably the poster boy for electric vehicles. The auto industry had been in a state of bliss until he arrived, with the bigwigs raking it in and getting bigger by the day. Then came the Volkswagen diesel scandal, which completely altered the game’s dynamics.

This is when legislators decided enough was enough, and Europe, in particular, has gone above and beyond in enforcing strict emission standards. Electric vehicles have become a top priority, and VW, the villain of the storey until recently, has made significant progress in this area.

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Tesla in India
Tesla in India

The halo that surrounds Tesla, on the other hand, is only getting brighter because Musk was the first mover and clearly played a key role in challenging conventional wisdom. It’s debatable whether EVs would have made similar progress in a world without Tesla. Musk, without a doubt, has been at the centre of this transformation, and it is this aspect alone that has made him such a charismatic figure, along with the fact that his interests extend beyond automobiles to areas such as space exploration.

He is, after all, a businessman, which explains why, if he has to set up shop in India, he continues to press for lower import duties.

Model That is Feasible

Musk’s company obviously needs a viable business model to justify the low volumes it will sell in India, and the best way to do so is to have a lower entry barrier without the burden of high taxes. From a branding standpoint, it’s also a no-brainer for India to have Tesla in its stable. What could be better than Elon Musk appealing to GenNext in a country where two-thirds of the population is under 30 years old, even if most of them cannot afford a Tesla?

Is it fair, however, to give the company special treatment when so many others have gone above and beyond in their localization plans, even putting their models on the road? To be fair, the government hasn’t said whether it plans to lower EV duties even further in order to help Tesla get up and running quickly. Other automakers, who have already set aside funds for this endeavour, will not object, as any benefit is welcome. They will, however, wonder if the American brand influenced their decision.

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Tesla in India
Tesla in India

What Role do The States Play?

The states, on the other hand, are equally committed to going all out in the race for Tesla Motors. Given West Bengal’s track record with the Nano project, eyebrows were naturally raised when it made a pitch for Tesla. In recent months, Tamil Nadu has made a lot of noise about its desire to become an EV hub. Apart from Hyundai, Ola Electric, TVS Motor, Greaves Electric, and Simple Energy are among Tamil Nadu’s two-wheeler manufacturers. Perhaps by the end of this decade, Citroen will have an electric lineup at its Tiruvallur plant.

The state also wants to send the right signals at a time when it is dealing with the crisis of providing an alternative livelihood for Ford’s workforce.

It remains to be seen which of these states will receive the Tesla mandate in the end. Perhaps that is jumping the gun, because Elon Musk must first decide whether India is even on his radar. The wooing game will continue in earnest until then.

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