In addition to Tesla’s business, Musk also hopes to promote “Star Chain” services in the Indian market.
Tesla CEO Elon Musk arrived in China on the 28th.
Prior to this, he announced on the 20th a postponement of his highly anticipated trip to India, citing Tesla’s related obligations. Previously, Musk had planned to meet with Indian Prime Minister Modi and the founder of an Indian space startup from the 21st to the 22nd. According to reports, he had planned to announce an investment of $2-3 billion in India during the trip, mainly to establish a Tesla factory.
Why did Musk delay his trip to India?
(‘Musk (Image source: First Financial)’,)
To avoid Indian elections?
On April 10th, Musk posted on X stating that he was looking forward to meeting with Modi.
Regarding the news of Musk’s visit, Modi once said, “I hope to invest in India because in India, it doesn’t matter who invests, but the sweat put into work must be from our own people. This way, young people in our country can obtain employment opportunities.”
In addition to Tesla, Musk is also the owner of rocket company SpaceX and social media X (formerly Twitter). In addition to advancing Tesla’s business, Musk also hopes to promote his “Star Chain” service to the Indian market. According to sources familiar with the situation, some media outlets have stated that Star Chain’s related business has been guaranteed by the Indian government and will start operating in India as early as the third quarter of this year.
According to reports, the Indian Ministry of Finance has amended the Foreign Exchange Management Act to allow up to 100% of foreign direct investment to enter India’s space industry, including satellite manufacturing and satellite data products.
However, on the 20th, Musk postponed his planned trip to India citing Tesla’s “extremely heavy” workload. Musk said, “Unfortunately, Tesla’s mission is very heavy and the visit to India has to be postponed, but I am very much looking forward to the visit later this year.”
After Musk announced the postponement of his itinerary, there was intense discussion within India about it. Indian media commented that Musk’s move may be to “avoid suspicion” and not want to get involved in Indian elections. Indian opposition party member Priyanka Chaturvedi said on social media that he believes Musk’s delay in his trip is due to concerns that if he visits India at this time, he may be pulled to the platform of the Indian People’s Party.
The Indian general election officially started on the 19th of this month and will last for over a month.
India announces new electric vehicle policy
As early as 2016, Musk had plans to bring Tesla into the Indian market, but what could not be avoided was India’s high tariffs.
In 2021, Musk once again stated on social media that Tesla hopes to enter India to build a factory, provided that the Indian government can reduce import tariffs so that Tesla can sell in India.
A few weeks before Musk’s scheduled visit to India, the Indian government announced a new electric vehicle policy. According to this policy, companies establishing production bases in India will receive import tariff incentives with a minimum investment of $500 million to attract global large enterprises such as Tesla to invest in the electric vehicle sector in India.
According to this policy, companies investing in the establishment of electric passenger vehicle production facilities will be allowed to import a certain number of cars at lower tariffs, which is also a key prerequisite for Tesla to enter India and test its market potential.
Meanwhile, prior to Musk’s visit to India, Indian policymakers had already initiated a consultation process to release policy guidelines for electric vehicles.
There are even reports that Maharashtra and Gujarat in India will provide Tesla with land for building factories.
After Musk announced a delay in his visit to India on April 20th, Indian Finance Minister Nirmala Sitharaman stated that India is formulating policies to ensure attracting large companies to invest in India. When answering questions about Musk’s visit to India, she said, “Policies have been formulated to attract investment. We hope manufacturers and investors come to India not only to produce for India, but also for exports. We will strive to attract manufacturers and investors through policies.”
In fact, as early as April 2015, India proposed the “National Plan for Electric Mobility” (FAME) to promote the development of new energy vehicle technology, pilot projects, and the construction of supporting infrastructure such as charging piles.
In the following years, India has been actively introducing policies related to electric vehicles. In recent years, establishing a vibrant electric vehicle ecosystem has also been one of the main goals of the Indian government in order to reduce dependence on imported crude oil.
Dan Ives, Managing Director and Senior Analyst at investment bank Wedbush Securities in the United States, previously stated in an interview with First Financial reporters that with weak demand, the entire electric vehicle industry is not going to have a good time in a price war. “There will be winners and losers, and surviving car companies will survive this crisis. The electric vehicle industry will experience growth, but we will go through a painful digestion period.”
“Moreover, the scaling up of electric vehicle factories and the construction of supply chains are very difficult. Companies such as Rivian, Lucid, Fisker, and many startups are facing these difficulties.” He said that electric vehicles are a survival of the fittest industry. As of the time of the reporter’s press release, Avis maintained a “outperforming” rating for Tesla stocks and a target price of $275.