Tesla postpones the plan to enter the Indian market.. Indonesia is the password

“The misfortunes of a people when people benefit.” This proverb seems to apply to India – now – after Tesla’s decision to postpone its plan to enter the Indian market, and its failure to persuade officials to reduce import duties on its electric car; India’s loss could be Indonesia’s gain.

In this regard, the US electric car maker has temporarily suspended plans to launch 4 models in India, has abandoned the search for showrooms, and has reassigned members of its local team to other countries.

Tesla’s decision came after a year of attempts to persuade the authorities to lower import duties on electric vehicles, which it intends to ship from the United States and China.

Meanwhile, the businessman, CEO of the company, Elon Musk, is heading to meet Indonesian President Joko Widodo, and visit several regions across Indonesia, which is the largest producer of nickel, a key metal for electric car batteries.

Tesla
Tesla CEO, Elon Musk – Photo courtesy of the National Herald

India’s loss

Billionaire Elon Musk has long advocated for the Indian government, hoping for a reduction in import duties; What allows the company to establish its feet in the country.

The government demanded that the company establish a factory for sale locally and for export, but Musk promised to implement this if the experience of selling imported cars in the country was successful.

Tesla has been searching for months for suitable locations to open showrooms and service centers in major Indian cities, such as New Delhi, Mumbai and Bangalore.

The US company had set a February 1 deadline to see the results of its pressure on the government, the day India unveils the budget and tax changes, according to Reuters.

Tesla was forced to suspend all its plans to import cars into India as soon as it learned that Prime Minister Narendra Modi’s government would not offer any concessions, and some of its crew members in India assigned additional responsibilities in other markets.

car sales in india

Earlier this year, Musk revealed that he was working to overcome sales challenges in India with the government, but strong demand for Tesla’s electric cars in other markets, and a dispute over tariffs, prompted it to change its strategy.

Transport Minister Nitin Gadkari commented on this that Tesla will benefit from manufacturing its electric vehicles in India, and it is not acceptable to import cars from China.

Tesla struggled to cut tariffs at a time when India scored a significant win in January, when German luxury car maker Mercedes-Benz said it would start assembling one of its electric cars in the country.

Tesla sought to pull the rug from the local car manufacturer, Tata Motors, which dominates the Indian market, but the price of Tesla exceeds $ 40,000, and India imposes 100% import duties on cars that cost $ 40,000 or more, and 60% for vehicles whose price is lower. about it.

Tesla
Tesla factory in Shanghai, China – Photo by Reuters

Indonesia attracts international companies

In the past months, Indonesia has drawn the attention of many car and battery manufacturers with a variety of incentives to achieve its ambitious goals in the electric car sector.

Indonesia also has the world’s largest nickel reserves, and has struck billions of dollars in deals with South Korean and Chinese companies to advance these goals and tap into nickel resources.

LG Energy Solutions, among others, has announced an investment of nearly $9 billion to build supply chains from mining to manufacturing.

The South Korean company also began collaborating with Hyundai Motors to develop a battery factory in the country.

In addition, Contemporary Imprex Technology is investing nearly $6 billion in a battery development project with state-backed PT Anika Tamyang.

Earlier this month, the country announced investments of $15 billion from China’s Npingbo Contemporary Branch Legend and LG Energy to develop an electric vehicle battery infrastructure.

The transformation of companies into Southeast Asia’s largest economy shows how important proximity to sources of raw materials that feed manufacturing is.

However, transitions are still expensive, slow, and difficult for companies, and Tesla knows this well. It quickly set up industrial centers in China and Germany, countries known for their ingenuity in industrial production and policies that help sell their cars.

After facing a crisis in the manufacture of electric vehicles in the United States, Tesla’s share in the global market has grown, and it is looking to secure materials and make its own batteries.

Although electric cars make up a small percentage of sales, compared to China and the United States; Indonesia aims to take advantage of the existing resources, and put in place policies to make it a fertile ground for investments.

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