'Tesla's loss, not India's': Ola CEO Bhavish Aggarwal on Tesla's pullback

Elon Musk's Tesla has not responded to inquiries from officials in New Delhi and is no longer expected to invest in India

Tesla’s choice to avoid investing in the Indian market is a major missed opportunity for the US-based company and not for India, said Bhavish Aggarwal, chief executive of Ola Cabs.

In a post on X (formerly Twitter), Aggarwal said, “If true, this is Tesla’s loss, not India’s. While the Indian EV and Lithium ecosystem is early, we’re gaining momentum quickly. It’ll be too late for Tesla when they look at India seriously again in a few years.”

If true, this is Tesla’s loss, not India’s. While the Indian EV and Lithium ecosystem is early, we’re gaining momentum quickly. It’ll be too late for Tesla when they look at India seriously again in a few years. https://t.co/k7EsPGp9LP

— Bhavish Aggarwal (@bhash) July 4, 2024

According to a report by Bloomberg, Tesla has not responded to inquiries from officials in New Delhi and is no longer expected to invest in India. This development follows Elon Musk’s postponement of his visit to the country. The report attributes Tesla’s lack of plans for further investment in India to the company's financial challenges.

 

Tesla has experienced a second consecutive decline in global deliveries this quarter and is facing heightened competition from China. Additionally, the automaker has announced job cuts, sold its flagship Cybertruck stall, and postponed the construction of its plant in Mexico.

The report suggests that the government may now focus on domestic companies such as Mahindra & Mahindra, and Tata Motors to enhance electric vehicle (EV) production in India.

In April, Musk cancelled a scheduled trip to India, where he was set to meet Prime Minister Narendra Modi, due to urgent matters within his company.

Initially, he had revealed his intention to visit shortly after India reduced import taxes on electric vehicles for foreign manufacturers. These manufacturers must commit to investing at least Rs 4,150 crore and commence local production of electric vehicles within three years.

New electric vehicle policy

In March this year, the Indian government sanctioned an Rs 41.5 billion ($500 million) electric vehicle (EV) policy, offering several incentives to attract global EV investments and position India as a major manufacturing hub for advanced EVs.

The policy seeks to offer Indian consumers access to advanced electric vehicle models, enhance the ‘Make in India’ initiative, lower production costs, cut down on oil imports, reduce urban air pollution, and foster a competitive domestic auto manufacturing sector.

The policy requires a minimum investment of Rs 41.5 billion, with no upper limit, and sets a three-year timeline to establish manufacturing facilities and begin commercial EV production. Companies are required to achieve a domestic value addition (DVA) of 25 per cent by the end of the third year and 50 per cent by the end of the fifth year. A customs duty of 15 per cent will be imposed on completely knocked down (CKD) units with a cost, insurance, and freight (CIF) value of $35,000 or more for five years, provided that manufacturing facilities are established within three years.

The duty exemption will be limited to the investment made or Rs 64.84 billion, whichever is lower, with a maximum import limit of 40,000 EVs at a rate of no more than 8,000 per year for investments of $800 million or more. Annual import limits that remain unused can be carried forward. Investment commitments need to be backed by a bank guarantee, which will be enforced if there is a failure to meet the Domestic Value Addition (DVA) and minimum investment requirements.