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Tesla's attempt to crack Indian market puts focus on tariffs

Musk wants lower price tags to lure more early adopters

A Tesla Model X: Four of the company's models have been approved for sale in India, though the release dates in the country remain unknown.   © Reuters

TOKYO -- As Tesla prepares to debut its electric cars in India, automakers worldwide are watching how New Delhi responds to the company's push for lower tariffs and how that could impact their own strategies in the Indian market.

The world's largest electric vehicle maker had obtained approval to sell four models in India as of the end of August, according to the website of the country's transport authority. Release dates and price tags have not been announced, but speculation suggests the EVs will be available in the country by the end of the year.

Tesla co-founder and CEO Elon Musk plans for initial sales in India to consist of imported vehicles. But since news broke that the U.S. automaker launched a local unit in Bangalore, media outlets have reported that Tesla eventually plans production in India as well.

"If Tesla is able to succeed with imported vehicles, then a factory in India is quite likely," Musk said on Twitter in late July when asked about the possibility.

But while hinting at an Indian factory, which would provide an economic boost to the country, Musk also urged the Indian government to make concessions -- namely on its steep EV tariffs, which stand at 60% to 100%.

India's "import duties are the highest in the world by far of any large country!" Musk tweeted, adding that Tesla is "hopeful that there will be at least a temporary tariff relief for electric vehicles."

Musk likely hopes that a tariff cut and a resulting reduction in prices would help Tesla attract more early adopters and better gauge customer reaction in the Indian market. Greater EV adoption also would encourage more construction of related infrastructure in India.

Tesla has been lobbying India to slash EV tariffs, Reuters reports. New Delhi is thought to be undecided, with some reports in August saying the government rejected the idea, and others saying it is looking into the option in exchange for Tesla building a factory.

Modi's "Make in India" campaign, designed to bolster the manufacturing sector, has embraced foreign players as long as they ramp up local production. Whether India reduces EV tariffs likely will impact other foreign automakers' strategies in the country.

India subsidizes electric cars, aiming to have EVs account for roughly 30% of all new vehicles sold in the country by 2030, up from less than 1% currently. Suzuki Motor, the largest seller of passenger cars in India, aims to launch electrics there by 2025.

Prime Minister Narendra Modi is working to update India's electricity mix, which primarily relies on coal. EVs are critical to India's high-tech and environmental goals, supported by increased use of renewable sources.

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