Tesla's Investment Plans in India Dims As Communication Falters, Says Report

India is not expecting Tesla to make any investment in the country soon as company executives have reportedly "stopped" communication with Indian officials.

According to a report by Bloomberg, Elon Musk's team has not reached out to any official since Musk postponed his visit to India in late April. It is understood by the government that Tesla is facing capital issues and does not intend to make new investments in India in the foreseeable future.

Tesla's waning interest in India comes at a time when the company is reporting a decline in global quarterly deliveries for the second consecutive time alongside heightened competition in China.

The challenges for the luxury carmaker are steadily increasing over time. Earlier this year, Musk announced massive staff reductions, whereas the rollout of Tesla's new model, Cybertruck, has been sluggish. Meanwhile, the construction of a new plant in Mexico has faced delays.

Speculations around Musk's visit

In April, Musk canceled a scheduled visit to India, which would have included a meeting with Prime Minister Narendra Modi. The visit came to light just when India had implemented a reduction on its import duties on electric vehicles from foreign manufacturers.

The reduced duties required manufacturers to invest at least 41.5 billion rupees ($497 million) and begin EV production from a local factory within three years.

As of now, government is banking on domestic automakers such as Tata Motors Ltd. and Mahindra & Mahindra Ltd. to expand EV production in the country. They added that Tesla would be welcome to benefit from the revised import tax policy if Elon Musk decides to have a change of thought.

However, India's EV market is still nascent with EVs comprising just 1.3 per cent of total car sales last year, according to BloombergNEF. Many buyers are also reluctant to transition to electric cars owing to their high initial costs and the limited availability of charging stations.