Benzinga - by Shanthi Rexaline, Benzinga Editor.
Tesla, Inc. (NASDAQ:TSLA) has been quick with its India plans ever since the Southeast Asian nation relaxed import duties to reduce the burden of overseas automakers exporting cars into the country. The electric-vehicle giant is mulling plans to import Giga-Berlin-made cars to India, a report said on Thursday.
What Happened: Tesla has commenced production of right-hand drive (RHD) cars in Germany meant for exporting to India later this year, Reuters reported, citing people familiar with the matter. The Giga Berlin currently manufactures only Model Y – an all-electric mid-size SUV, but the report said it wasn’t clear yet which model the company plans to bring to India.
Tesla did not immediately respond to Benzinga's request for comment.
This is the first time Giga Berlin is manufacturing RHD cars, and so far Tesla’s Giga Shanghai has been manufacturing cars for RHD markets such as Australia and Japan, the report said.
Incidentally, Indian officials had previously warned Tesla against using India as a dumping ground for made-in-China cars.
Why It’s Important: Under the new Indian import guidelines, automakers are allowed to import up to 8,000 cars costing $35,000 or more per year at a lower tax rate of 15%. This is a steep reduction from the 70%-100% taxes the country previously levied, depending on the value of the car.
The reduced tax rate is conditioned on the beneficiary company committing to invest at least $500 million and start domestic manufacturing within three years.
Tesla has been lobbying with the Indian government for long for the reduction, given the country’s huge market potential. The company has also planned to invest in a charging network and spend $2 billion on setting up a plant.
The report also said the U.S. company is planning to reduce sourcing from China and simultaneously increase its imports from India. A local media outlet in India reported earlier this week that Tesla has begun scouting for sites to locate its India factory. The Indian states in focus include those with existing automotive manufacturing such as Maharashtra, Gujarat, and Tamil Nadu, the report said.
The rumored move comes even as the Elon Musk-led company’s fundamentals have deteriorated amid supply and demand challenges.
Price Action: At last check, Tesla shares rose 1.10% to $170.24, according to Benzinga Pro data.
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