Tesla Cans India Entry Plan After Failing To Secure Lower Tariffs

Tesla Inc. has put on hold plans to sell electric cars in India, abandoned a search for showroom space, and reassigned some of its domestic team after failing to secure lower import taxes, three people familiar with the matter told Reuters.

Photo Insert: A Tesla Motors assembly line

The decision caps more than a year of deadlocked talks with government representatives as Tesla sought to first test demand by selling electric vehicles (EVs) imported from production hubs in the United States and China at lower tariffs.

But the Indian government is pushing Tesla to commit to manufacturing locally before it will lower tariffs, which can run as high as 100% on imported vehicles.

Tesla had set itself a deadline of Feb. 1, the day India unveils its budget and announces tax changes, to see if its lobbying brought a result, the sources with knowledge of the company's plan told Reuters.

When Prime Minister Narendra Modi's government did not offer a concession, Tesla put on hold the plans to import cars into India, added the sources, who sought anonymity because the deliberations were private.

For months, Tesla had scouted for real estate options to open showrooms and service centers in the key Indian cities of New Delhi, Mumbai, and Bengaluru but that plan is also now on hold, two of the sources said.

Tesla has assigned additional responsibilities for other markets to some of its small team in India. Its India policy executive Manuj Khurana has taken on an additional "product" role in San Francisco since March, his LinkedIn profile shows.

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