[anjan_c2007]

Elon Musk had just a few days ago expressed concern on import duties for imported EV's saying it was amongst the highest in the world. He had contented that duties on EV's and ICE vehicles were the same and this treatment meted out to clean energy vehicles was unjust. The government responded by saying that if EV's are made in India, the demand can be looked into.

The latest on this front are the sparks flying from within the industry wherein Society of Indian Auto Makers (SIAM) says it will hurt local auto makers who have invested heavily in EV manufacturing. Ola, the scooter maker (wishes to be Electric King Ola now) and Tata Motors are backing the SIAM contention to disallow such duty cuts. Hyundai on the other hand has joined the voice of Tesla to say that import duty cuts will allow imported EV's to generate demand and build volumes before commencing production here on a large scale.

The link here:-

https://m.economictimes.com/industry...w/84804594.cms

[batish]

Originally Posted by anjan_c2007

Elon Musk had just a few days ago expressed concern on import duties for imported EV's saying it was amongst the highest in the world. He had contented that duties on EV's and ICE vehicles were the same and this treatment meted out to clean energy vehicles was unjust. The government responded by saying that if EV's are made in India, the demand can be looked into.

The latest on this front are the sparks flying from within the industry wherein Society of Indian Auto Makers (SIAM) says it will hurt local auto makers who have invested heavily in EV manufacturing. Ola, the scooter maker (wishes to be Electric King Ola now) and Tata Motors are backing the SIAM contention to disallow such duty cuts. Hyundai on the other hand has joined the voice of Tesla to say that import duty cuts will allow imported EV's to generate demand and build volumes before commencing production here on a large scale.

I don't see the problem here. They're not asking for subsidy, they are asking for simple duty cuts. If the government is really serious about shift to EVs, duty cuts temporarily for 3-4 years should not be a problem. Our country is not really known for fixed policy decisions. Every other government or court ruling change these decisions overnight.

So, till these imports are not massive and start eating government's mammoth duty share till then the government can and should manage. This much they should be bound for cleaner energy.

[shortbread]

One understands the goodwill/intentions associated with Hyundai, Tesla etc

But once the Govt. opens this up the biggest beneficiaries will be chinese automakers witch excess capacity who will use India as their latest dumping ground. Even non chinese operators would rather source cheap chinese components rather than source locally.

If India needs to create a viable EV space then it needs to help local suppliers shore up volumes. Only regulation can make businesses undergo the hard grind in this regard.

Plus who is Musk fooling. His market share in two of the largest EV markets is falling, EU and China. If he is the visionary he claims he is, then this is his 1981 Maruti moment. There is a massively underserved market and next to no competition.

[abhishek46]

Originally Posted by shortbread

One understands the goodwill/intentions associated with Hyundai, Tesla etc

But once the Govt. opens this up the biggest beneficiaries will be chinese automakers witch excess capacity who will use India as their latest dumping ground. Even non chinese operators would rather source cheap chinese components rather than source locally.

You are correct.
The Electric 2wheeler market is flooded with chinese substandard garbage.
This import tax is the only wall, which is preventing similar scenario in passenger car market.

[speedmiester]

I am a big fan of Tesla and want them in India as of yesterday, but I will not support Elon's request for reducing Import duty.
When Tata Motors and MG can build their EVs in India, why should there be any concession for Tesla. Why not invest in India and build this as an export hub.

Besides Tesla is not offering small segment hatchback which will change the EV game in India. The cheapest Tesla will be upwards of 40L which majority of the market cannot afford and the people who can afford in this segment would not mind paying the price for Tesla.

[kosjam]

Originally Posted by shortbread

Plus who is Musk fooling. His market share in two of the largest EV markets is falling, EU and China. If he is the visionary he claims he is, then this is his 1981 Maruti moment. There is a massively underserved market and next to no competition.

Unfortunately, Musk and Tesla are massively over budget, with major quality control issues at the Shanghai Gigafactory, and the Berlin Gigafactory being uncertain of when they will start operations. He simply does not have the moolah to begin building just the factory in India, much less the infrastructure required to make it his Maruti moment.

Talking about the infrastructure, both EU (thru Berlin) and China are already sort of mature EV markets with a more or less developed charging infrastructure, so his investments in that area are not required to be very large. On the other hand, he will have to build up the charging network in India from scratch for his vehicles to succeed the way they did in USA.

And finally, the cost factor. China has a large apetite for premium cars as evidenced by the high sales of almost every premium brand. India is at best a middle income group market where it is the premium hatches, compact SUVs and executive sedan level vehicles that rule the roost. As a result, Musk won't be able to manufacture (and sell) the Model 3 in large enough numbers to be able to justify the input costs of building a factory in India.

[IshaanIan]

The last thing we need is premature backing by the government. Remember when European countries used to provide tax breaks on diesel cars quoting their lower carbon dioxide emissions? Now look how European countries are banning diesels outright after having learnt how polluting they actually are. Don't want the same thing happening here. Lithium mining is heavily unregulated, production of electricity in India is still dependent on archaic non planet-friendly techniques, no need to give Tesla and other EV manufacturers a free ride into our market only to punish the consumers later.

[avira_tk]

Originally Posted by batish

I don't see the problem here. They're not asking for subsidy, they are asking for simple duty cuts. If the government is really serious about shift to EVs, duty cuts temporarily for 3-4 years should not be a problem. Our country is not really known for fixed policy decisions. Every other government or court ruling change these decisions overnight.

So, till these imports are not massive and start eating government's mammoth duty share till then the government can and should manage. This much they should be bound for cleaner energy.

The problem is that he wants special privileges for personal transport which is what Tesla manufactures. There is absolutely no need for duty cuts, they can operate within the duty structure if customers exist. India has been quite consistent that manufacturing will be prioritised over imports, that hasn't changed, it shouldn't be.

I don't know why Tesla is so special that they should get a different set of rules, selling here, then build here, else pay up. I wonder what the carbon footprint s for importing a car and its charging set up. Virtue signalling by buying a car so you can save the planet should remain an expensive hobby.

[no_fear]

I for one, welcome Tesla and I hope the government reduces the high taxation in place. I agree with other forum members that just accommodating to Tesla makes no sense, but then again keeping high tariffs and not allowing other players to enter the market doesn't do us any good.

We are severely lacking on the global manufacturing arena. We need more FDI and we need to liberalize our economy. We can have anti dumping laws to protect consumers / industries but without talent and technology coming from overseas, we will be lacking against countries like China.

One example I want to show here - the bullet trains of China.

15 years ago, China used to import bullet trains from Japan (Hitachi + Kawasaki) and Germany (Siemens). Today China makes its own bullet trains and has the biggest network in the world. It has happened through technology transfer.

Tesla for all the hoopla is a very young company. It started production in 2012. In 9 years it has become the main player in the EV space. It is possible that as it scales up in volume and brings costs down, it can enter into the economy car segment. The company knows fully well that it cannot just sustain itself on high margins and premium products.

[LeoRBK]

Originally Posted by IshaanIan

The last thing we need is premature backing by the government. Remember when European countries used to provide tax breaks on diesel cars quoting their lower carbon dioxide emissions? Now look how European countries are banning diesels outright after having learnt how polluting they actually are. Don't want the same thing happening here. Lithium mining is heavily unregulated, production of electricity in India is still dependent on archaic non planet-friendly techniques, no need to give Tesla and other EV manufacturers a free ride into our market only to punish the consumers later.

1.

Sorry, but I thought of clarifying car tax in much of the UK was and is based on the vehicle CO2 tailpipe emissions. This relation has not changed in the last few years. There were never tax breaks on diesel cars. I think either what you stated is not a fact or it is too old to be in my memory. As a matter of fact, a few years back petrol cars with smaller engines were placed in low tax bracket same as diesels.

In hindsight, the policymakers got it wrong. Instead of looking at all the gases emitted from the tailpipe rather than looking at CO2 was not scientific. We cannot understate the corporate cheating scandal by VAG which had an influence on new policies that are in force today.

The tax rates on the other hand keep changing every few years. Recently low CO2 emissions (where diesels were taxed lower than petrol) structures were replaced by zero-emission tax structures.
Now, only Battery electric vehicles enjoy zero taxes and all the rest including hybrids, petrol and diesel are taxed based on their emissions.

2.
I think you are incorrect in stating a ban on diesel cars. New diesel cars are still on sale today and will be on sale along with petrol till the year 2030.

3. On your remark on Lithium mining, I advise you to watch the following

https://www.youtube.com/watch?v=huYXIXtCsrw

https://www.youtube.com/watch?v=FbzL09SoHdo

https://www.youtube.com/watch?v=aKgkWX7rZTk

In these videos, you will find that while there are challenges with mineral extraction, there are substantial efforts to clean up and there is light at the end of the tunnel.
May I also ask a question if we will stop driving a car if we find out that the fuel used in the car came from a conflict-ridden Arab or African nation?

4.
Regarding your remark on a free ride, I do not think any of the manufacturers quotes in the original post requested a subsidy. For a car that will probably sell a few thousand every year, does it make business sense to set up local manufacturing right from the word go? Shouldn't there be policies that invite more automakers to set shop in India and gradually increase production. The fact that present policies delay the introduction of modern auto technologies in India is very sad.

[Hayek]

Frankly, the SIAM stand here is utter rubbish. The auto industry globally operates on EBITDA margins of under 10% for most players - with the most profitable players like Toyota and BMW barely crossing 15% in good years. Even after considering 15% duties on inputs, a 40% duty on output would increase margins for a domestic manufacturer from 0% (assumed without protection) to 18%. So the 40% duty that Musk has proposed is more than enough to turn an unprofitable domestic manufacturer into one with industry beating margins. A player who would have been loss making without duties presumably does not deserve to exist. In short, the 60% and 100% duties on imports merely serve to make domestic manufacturing of products that would otherwise not be made viable.

However, I don’t believe that protection for local EV manufacturing should be less than for local ICE vehicle manufacturing - if anything, you could use the infant industry argument to justify higher import duties on EVs. The lower GST and Registration charges on EVs already help imported and locally made EVs compete with ICE cars.

So what should the government be doing?

1) Scrap the 100% duty segment on imports priced above USD 40,000 CIF. This only serves to irritate our trade partners and does not protect any domestic manufacturer
2) Reduce the 60% duty on other ICE cars to 40% and set out a road map to get it down to 5% above the normal duty rate on raw materials over time - say 10 years. This will force manufacturers to start working on efficiency - instead of perpetually screwing the Indian consumers
3) Set the duty on EVs at 10% above that on ICE cars - but give it back to customers as a 10% subsidy available on both domestically manufactured and imported EVs - and set a road map to bring that duty down to the same level as ICE cars in 15 years

If you dislike sales of cars with large engines or that cost more than a certain amount, increase the GST cess on them - but don’t assume that a locally assembled ICE car with a large engine is better than a similar import.

A policy such as this gives adequate time for local manufacturers to adapt - but gets us on a path to one where the Indian customer can choose cars based on what she wants - not what protected and inefficient or profiteering local manufacturers make.

[M00M]

I am in favour of the GOI reducing taxes on CBU EV to promote them. We have to be ground realistic on few things :

1. Local manufacturing of EV will happen but its still few years away.
2. High end EV like a Porsche Taycan is not going to be made in India and lets say they import it for less duties and sell it, if they can sell more cars then the tax collection over all will increase and it would be something better than nothing right.
3. More options for people to move to EV thereby reducing oil import bill marginally and slowly.

Its high time we got out of protection raj of the 1980's but it seems that the politicos and some vested local players keep lobbying the GOI to introduce protectionist measure which dont help the country at all.

A VW ID 4 or Tesla Model 3 or Model Y are not going to be made in India immediately unless and until there is demand for them and there is enough qualified local suppliers. The best thing to do is to lower taxes for now, take some form of guarantee that this lower tax is contingent to opening a local plant and within x years.

Less tax equals to more sales equals to business churning, here we move in the other direction even after the economy being in a slump. Just my view.

[avira_tk]

Originally Posted by no_fear

I for one, welcome Tesla and I hope the government reduces the high taxation in place. I agree with other forum members that just accommodating to Tesla makes no sense, but then again keeping high tariffs and not allowing other players to enter the market doesn't do us any good.

We are severely lacking on the global manufacturing arena. We need more FDI and we need to liberalize our economy. We can have anti dumping laws to protect consumers / industries but without talent and technology coming from overseas, we will be lacking against countries like China.

One example I want to show here - the bullet trains of China.

15 years ago, China used to import bullet trains from Japan (Hitachi + Kawasaki) and Germany (Siemens). Today China makes its own bullet trains and has the biggest network in the world. It has happened through technology transfer.

Tesla for all the hoopla is a very young company. It started production in 2012. In 9 years it has become the main player in the EV space. It is possible that as it scales up in volume and brings costs down, it can enter into the economy car segment. The company knows fully well that it cannot just sustain itself on high margins and premium products.

Tesla isn't offering anything on those lines, they want market access to sell imported cars on the cheap. The Chinese have a manufacturing policy, they don't care about IP and other legal aspects, that's why they are the factory of the world.

Market access to tesla won't improve anything here, they can build a factory and set up a dealership network like everyone else.

[no_fear]

Originally Posted by avira_tk

The Chinese have a manufacturing policy, they don't care about IP and other legal aspects, that's why they are the factory of the world.

Market access to tesla won't improve anything here, they can build a factory and set up a dealership network like everyone else.

If you think China is the factory of the world, then it worked very well for them to becomes the 2nd largest economy. Companies like Midea, Vivo, Xiaomi, Oppo did not come out of thin air. They all came by starting as suppliers to the foreign brands and then scaling up their own expertise. India is nowhere. We are languishing and have barely attracted any large company to come and set up shop here in the past 5 years.

Market access to Tesla will make a big change. They will source for local parts suppliers, and create competition.

If you want another example, look at Thailand. They do not have a domestic auto manufacturing industry, but are one of the biggest parts suppliers to the Japanese car makers.

We tend to write off the Chinese as just IP stealers and factory... Japan was the exact same in the 1960s. Stole American and German technology, and now the rest is history. China has long evolved from making t shirts and slippers and cheap knock-offs. They are a serious player in utilities, industrial and technology manufacturing.

[avira_tk]

Originally Posted by no_fear

If you think China is the factory of the world, then it worked very well for them to becomes the 2nd largest economy. Companies like Midea, Vivo, Xiaomi, Oppo did not come out of thin air. They all came by starting as suppliers to the foreign brands and then scaling up their own expertise. India is nowhere. We are languishing and have barely attracted any large company to come and set up shop here in the past 5 years.

Market access to Tesla will make a big change. They will source for local parts suppliers, and create competition.

.

I'm not sure how this is directed at me, I support the Chinese policy, and factory of the world was a compliment, not sure how you interpreted it as slur.

The opening post on this thread is about demands for lower import duties. Tesla isn't going to develop a local base if they can set up a trading operation here.