Elon Musk of Tesla has been a key figure in growing the electric vehicle market, a market that is proving to be a goldmine for battery makers. Photo: AFP

Tesla founder Elon Musk said he has been unable to sell cars in India and is facing many challenges. When an Indian Twitter user asked him about his India launch plans, he said: “Still working through a lot of challenges with the government.”

The Indian government wants foreign manufacturers to set up plants in India as part of its ‘Make in India’ policy and imposes high import duties. But Tesla wants to initially sell completely built units, sourced from abroad, before setting up a plant.

In a recent letter to the Indian road transport ministry, Tesla sought a relaxation of import taxes on electric vehicles before they enter the market. The company pointed out that the effective import tariff of 110% on vehicles priced above US$40,000 was “prohibitive” for zero-emission vehicles.

Last October, Indian Transport Minister Nitin Gadkari told Tesla not to sell Chinese-made cars in India and instead manufacture them in India and export them to the world. Tesla now has a big factory in Shanghai that produces more cars than its factory in Fremont, California.

Gadkari said the government would support Tesla if it wanted to set up a plant in India. The minister suggested that the American carmaker should take up the offer or other electric vehicle manufacturers operating in India would soon be able to produce cars of Tesla’s standard.

In addition, other luxury carmakers such as Mercedes-Benz and BMW that have plants in India have also lined up some luxury electric cars for the Indian market. Mercedes-Benz announced plans to locally assemble electric vehicles and will manufacture high-end EQS electric limousines in India this year.

The locally built EQS will invite a lower duty of 40%, compared with 110% for imported ones.

Last month BMW claimed that the first of its electric all-wheel-drive model iX was sold out on the first day of its launch. Deliveries will start in April this year.

Indian automakers have also lobbied against concessions to Tesla, as they argue it would be unfair to companies that have invested in building local capacities. Among the domestic players, Tata Motors dominates the electric passenger vehicle market in India.

The company sold 2,255 electric vehicles in December, its highest EV sales in one month. The other major players include Mahindra Electric and Hyundai.