Elon Musk's company tesla has finally made an official entry in india and the Model Y has been launched. Its starting ex-showroom price is Rs 59.89 lakh, while the long range variant reaches Rs 68 lakh. This car is available only in rear-wheel-drive (RWD) configuration. The company has also opened India's first showroom in Bandra-Kurla Complex (BKC) in Mumbai. However, just a few weeks after the launch, there are reports that tesla prices may be reduced by Rs 15–20 lakh.
Why is tesla so expensive in India?
The price of tesla Model Y in india is much higher than in the US and Chinese markets. In the US, the same car is available for around $44,990 i.e. Rs 38.60 lakh, while in china it is priced at Rs 31.5 lakh and in germany it is around Rs 46 lakh. The biggest reason for high prices in india is the import duty, which is levied from 70% to 110%. Since tesla is currently entering india through CBU (Completely Built Unit) vehicles, it is being taxed heavily.
Import duty is the biggest hurdle
Elon Musk has expressed concern about India's import duty many times. He posted in 2021 that the import duty on vehicles in india is the highest in the world. He believes that before setting up a factory in india, he wants to see what the demand is in the market, but due to such an expensive price, the car is not able to reach the customers.
The displeasure of domestic companies also became an obstacle
While Musk is demanding relief from the government, domestic companies like Tata Motors and mahindra have opposed it. He says that if foreign companies are exempted from import duty, it will be unfair to local investors who have already invested heavily.
What is the government's new EV policy?
In march 2024, the indian government introduced a new Electric Vehicle (EV) policy, under which foreign companies will be allowed to import 8,000 electric cars every year at 15% import duty if they invest more than Rs 4,150 crore in India. However, to avail this facility, companies will also have to agree to some conditions. They will have to start local production in india within three years. 25% localization will be required by the third year and 50% localization by the fifth year. Apart from this, the price of the vehicles to be imported should be more than $35,000 (about 29 lakhs).
Can the price be reduced by trade deal?
Negotiations are going on between india and the US on a trade deal, which also includes the issue of reducing import duty on cars. The US wants india to remove the duty on automobiles, so that tesla and other US companies can easily enter India. If this trade deal is finalized before July 31, 2025 and the import duty is reduced, then the prices of tesla Model Y can fall drastically.
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