Amid Trump-Musk fallout, will Tesla’s India story run out of charge before it begins?

Tesla shares tumble

Case in point is one of Musk’s most successful endeavours, his electric mobility giant Tesla. In India, the company has flip-flopped on whether it will manufacture in the country, but had been moving to set up retail operations. But the feud between Trump and Musk has had a significant bearing on Tesla.

Since the two have had a fallout, the company’s stock has taken a beating, falling close to 15%, and erasing around $150 billion in market value. With electric vehicle sales tempering globally and the emergence of rivals like China’s BYD, Tesla’s dominance in the sector was already under attack. And now, without the most influential American’s political backing behind its founder gone, Tesla’s expansion plans could take a back seat, or at least face some turbulence.

What adds to the misery is not just Trump publicly admonishing Musk publicly, and vice versa, but also that the US President has suggested he could terminate government contracts and subsidies given to Musk’s companies.

Would India be high on Tesla’s list?

Earlier this week, Union Heavy Industries Minister H D Kumaraswamy said that Tesla was not interested in manufacturing in India, but was looking to open retail showrooms in the country. He added that global EV makers like Mercedes-Benz, Volkswagen-Škoda, Hyundai and Kia have shown interest in applying under the ministry’s flagship Scheme to Promote Manufacturing of Electric Passenger Cars in India, notified in March last year.

An auto industry executive noted that with its stock taking a beating, and a reconciliation between Musk and Trump seeming unlikely, the company could find it difficult to tell its investors why it was pursuing setting shop in a market like India, where its vehicles may not garner mass appeal due to their high cost and India’s relatively nascent EV market and infrastructure.

For long, India and Tesla have had a ‘will they, won’t they’ dynamic to their relationship, which New Delhi had set to change, by making substantial policy manoeuvres to attract the EV major to its shores. Earlier, many believed the government’s EV manufacturing scheme was envisaged to attract Tesla to manufacture in India, after it complained of high duties on car imports, which can go up to 110 per cent.

It is worth noting that Trump was not impressed by Tesla’s India plans. In February, he had criticised Tesla’s plan to expand in India, calling it “unfair” to the US. “Now, if (Tesla CEO Elon Musk) built the factory in India, that’s okay, but that’s unfair to us. It’s very unfair,” he had said. Trump has since made similar objections to Apple’s expansion plans in India.