Tesla started initiatives to open a factory in India. The country, which has an important place in the electric vehicle market, imposes high taxes on imported vehicles, like Turkey. Tesla is pursuing localization to overcome this obstacle. However, there is also the possibility that this step is to avoid damage in the China-US trade tension.
Will Tesla establish a factory in India instead of China?
The brand has reached a significant production volume with its factory in Shanghai, China. The brand, which has gained a great advantage with this factory, especially in the Chinese market, is now seeking to grow in the Indian market. Tesla entered the market with vehicles produced in its Chinese factory. The brand, which has been trying to reduce taxes in India for a long time, found the solution in its Indian factory.
India has strict tax rules for imported vehicles. Accordingly, 60 percent tax is applied to vehicles under 40 thousand dollars, and 100 percent tax is applied to vehicles above 40 thousand dollars. In this sense, Tesla is having a hard time, especially against the Chinese models with which it competes in the market. In India, every vehicle over 40 thousand dollars is considered a luxury vehicle, whether it is electric or not. Tesla has been lobbying for electric vehicles to be exempt from this tax bracket for the last year.
Although the work was not successful, Tesla found the solution by opening a factory in India. However, there are also difficulties in terms of import vehicle production in India. In this sense, the government is trying to make a new legal regulation for the Tesla India factory.
There is currently no possibility of closure for the Tesla China factory. However, China has previously banned Tesla vehicles from being used in official institutions. The rearview mirror camera, especially in Tesla vehicles, is considered dangerous by the Chinese government. There is a possibility that the trade tension and embargo showdown between the USA and China will soon hit Tesla and Apple. In this sense, Apple decided to shift its production to India. It is a matter of curiosity whether Tesla will make such a decision after its India factory.
Tesla is seeking to open a factory outside India, in a region including Turkey. As you know, Tesla models sold in Turkey originate from Germany. Although the conditions for the Tesla Turkey factory are not yet ripe, it is known that the brand wants to grow especially in the Middle East market. In this sense, Türkiye is among the important candidates.