Days after deferring India visit, Tesla CEO Elon Musk lands in China

While New Delhi has only rolled out an electric vehicle policy (EV) last month, largely to accommodate the Texas-based carmaker, Tesla operates its biggest plant globally in Shanghai, producing over 1 million units of Model 3 and Model Y cars a year.

Chinese state media reported that Musk met Chinese Premier Li Qiang in Beijing on Sunday during which Li told Musk that Tesla’s development in China could be regarded as a successful example of US-China economic and trade cooperation.

Tesla has sold more than 1.7 million cars in China since it entered the market a decade ago. Moreover, China is also crucial for Tesla as it supplies its cars to New Zealand, Australia and Europe.

Reuters reported that Musk’s visit coincides with the Beijing auto show, which opened last week and ends on May 4. Musk’s itinerary Sunday afternoon also included a meeting with Ren Hongbin, a government official who heads the China Council for the Promotion of International Trade, the organiser of the Beijing auto show, the Chinese state media reported.

Prior to Musk’s visit to India, policymakers had kickstarted the consultation process to release guidelines for the EV policy. Hours after Musk announced on April 20 that he is postponing his visit to India, Union Finance Minister Nirmala Sitharaman had said that India is making policies to ensure big companies are attracted to India for investment, especially in light of industries expressing concerns around China.

To attract investments into the EV space, the Centre has lowered import duties to 15 per cent from 100 per cent for models of electric cars with a combined cost, insurance, freight prices of $35,000 or above for five years, a key precondition for Tesla’s entry to test out the “market potential” in India.

Earlier, the Centre is learnt to have turned down China-based BYD’s proposal to build a $1-billion EV plant in partnership with Hyderabad-based Megha Engineering and Infrastructures Ltd in June last year. The rejection of the proposal was in line with India’s broad policy to filter Chinese investments in crucial sectors in India.

A vibrant EV ecosystem is part of India’s policy push to help reduce extreme dependence on imported crude oil. India’s oil import dependency for FY24 climbed to 87.7% from 87.4% in FY23, according to official data. Cutting costly oil imports continues to be a key focus area for the government, and it also found a mention in the BJP manifesto for the 2024 Lok Sabha polls.

A similar strategy was seen in the case of mobile manufacturing where Apple and other global mobile phone manufacturers are receiving incentives under the Production Linked Incentive Scheme to begin making phones in India and help create a broader manufacturing base in the country.