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PluginIndia Electric Vehicles

Tesla and Hyundai vs OLA : Should India reduce import duty for electric cars?

29/7/2021

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In a major tweet war, Elon Musk - the founder of Tesla wants the Indian government to reduce import duties for electric cars, while Bhavish Aggarwal of OLA wants to build in India.
In view of Tesla, setting up a Gigafactory in India, it asked the government to considerably reduce import duties on fully assembled electric car's. Hyundai Motor India backed up the request saying any reduction in taxes on imported electric vehicles will be a welcome as it will help automakers generate volume and reach some scale.

Tesla wrote a letter to the Indian Government seeking a reduction on central taxes on import of fully assembled EV's to 40 percent. Currently, import duties on cars priced below $40,000 is 60 percent, and it’s 100 percent for cars priced above $40,000. It also depends on factors such as motor size, insurance and freight. Elon Musk in his appeal said, "Moreover, clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India."

Hyundai Motor India MD and CEO, S S Kim, said, “It will take manufacturers time to localise EVs by 100 percent. We are developing made-in-India affordable mass-market EVs but at the same time, if the government allows some reduction in the duty on imported CBUs, that would be very helpful for all of us to create some market demand and reach some scale."
About charging infrastructure Mr Kim said, "The customer is most concerned about the range and charging options. In this regard, we need some very strong support from the government."
​
To which Ola CEO Bhavesh Aggarwal disagreed and tweeted in response, "Strongly disagree with both. Let's have confidence in our ability to build indigenously and also attract global OEMs to build in India, not just import. We won't be the first country to do so!"

We want to do so, but import duties are the highest in the world by far of any large country!

Moreover, clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India.

— Elon Musk (@elonmusk) July 23, 2021

Strongly disagree with both. Let’s have confidence in our ability to build indigenously and also attract global OEMs to build in India, not just import. We won’t be the first country to do so! https://t.co/n6k7ShYeJX

— Bhavish Aggarwal (@bhash) July 27, 2021

PluginIndia's Take
We agree that we need Tesla to come to India and teach the ICE car OEM's a lesson. And the Indian government should reduce the import duty for Tesla to 40%. But our only concern is if we support Tesla we will then have to even support the snakes like Hyundai, Kia, Nissan, Chinese Car OEM's - who will launch EV's without any major RnD, support/service operations for Indian customers. We noticed how the Hyundai battery recalls were made. All issues had to be diagnosed by Korean teams. Cars were in service for many months. We don't need more of that. 
Ultimately the EV Ecosystem component ecosystem has to grow here in India. If we leave it to market and corporations, they will only do what is best for them not Indian the EV ecosystem. If auto OEM's have it their way they will only get CKD's for next 5 years. Hyundai is a case in point. We believe certain amount of regulations are required rather than letting corporations, do whatever they want.
However, Tesla's request has to be considered as they are looking at setting up a gigafactory in India.

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