Tesla execs are coming to India to talk EVs. What is on their agenda?

India is the world's third-largest automobile market and yet Tesla cars have not made their debut on Indian roads. For a while, Tesla and the Indian government have been unable to reach any agreement to sell Tesla cars in the country. And in what seems like another try to push Tesla's debut in India, senior Tesla executives are reportedly slated to meet with Indian officials on May 17 and May 18. 

Bloomberg reported that C-suite Tesla executives from Austin, Texas are set to visit India to meet Indian officials including those in the Prime Minister's office to discuss the possibility of an expansion of the EV-maker's supply chain. 

What's on the agenda? 

• Reports say Tesla seems to have taken a leaf out of iPhone maker Apple's book and is looking to diversify its operations beyond China, given the unending tension between Washington and Beijing. 
• But this doesn't mean Tesla has agreed to the Indian government's conditions of selling only Indian-made Teslas in the country. The company executives are expected to put forth Tesla's demand to reduce import duties on its cars once again. 
• However, reports also suggest the executives will discuss the possibility of sourcing locally-made components for Tesla cars. 

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Tesla's problem with India:

• Elon Musk has been critical of India's tariff rates on expensive imported vehicles saying that the rates are the "highest in the world by far of any large country."
• Currently, India levies import duties anywhere between 60-100% of the total cost of imported vehicles priced over $40,000, which includes insurance and shipping costs. 
• Tesla vehicles have largely been highly-priced. Now, despite the recent steep price cuts, Tesla's most popular model in the rest of the world - the Model Y SUV - costs about $46,990. In India, the same car will cost at least $80,000 if launched under current policies.  
• The Indian government on the other hand has been opposed to Tesla's idea of selling China-made cars in the country, given the tensions between the two countries. 
• India has insisted on Tesla to source at least $500 million of its components from the country for it to consider lowering the tariff rates. 
• On the other hand, India is having its own EV boom in the two-wheeler sector. Furthermore, Tesla's rival Mercedes-Benz AG has announced its plans to launch four new locally-made luxury EVs in India in the next year. 

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Tesla's situation in China:

• Tesla hasn't stopped its investment in China as of now. According to Reuters, Tesla recently applied to expand its Shanghai plant to produce pouch-type battery cells for the first time in the country.
• However, everything has not been well for Tesla in China. Recently, Tesla had to "recall" all of its cars ever sold between January 2019 and April 2023 over a braking issue. 

WATCH: Tesla will issue over-the-air software updates to 1.1 million units of its Model S, Model X, Model 3 and Model Y cars to allow changes to braking methods and add more warnings about the use of accelerator pedals, China's market regulator said https://t.co/vgMdZYGkBi pic.twitter.com/9QQMRUcwd4

— Reuters Business (@ReutersBiz) May 13, 2023

• While the Chinese regulator has labelled it a "product recall", Elon Musk and Tesla have often expressed disdain for the word "recall" and instead described it as an over-the-air (OTA) software update.
• However, it isn't clear whether Tesla is asking customers to bring their vehicles for maintenance or whether they are offering a refund for those who want to return their cars. 
• Last year, Tesla production had been hit hard by China's strict Covid response. 
• Recently, in an interview with CNBC, Elon Musk tried to downplay the problems posed for Tesla over the China-Taiwan-US issue, saying that any escalation will be far more devastating for companies other than Tesla, like Apple. 

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