Change of plans for the Model 2? What's happening between Tesla and India

Bloomberg speaks of a halt to discussions between the electric car manufacturer's execs and the New Delhi government: goodbye factory?

Tesla Model 2 (render)

By: Riccardo Ciriaco

Published by: Brian Potter

Jul 6, 2024 at 5:02am ET

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A bit like ghosting (the increasingly common practice of ignoring another person in order to close relations), Tesla executives have broken off contact with Indian officials, putting on hold a deal that seemed to have been concluded.

We're talking about the possibility for the American company to open an electric car factory in the Indian subcontinent, kick-starting expansion in a region where battery-powered vehicles are attracting heavy investment and where Elon Musk and co. have been aiming to land for a long time.

Long negotiation

It was early 2021 when New Delhi began courting the Texan manufacturer, proposing unprecedented incentives to attract capital to India. Nothing came of it then and the track remained cold for about two years.

However, we arrive at 2023 and an initial meeting between CEO Elon Musk and President Narendra Modi; a face-to-face meeting that culminated months later with the Indian government's decision to reduce duties on imports of electric vehicles to certain manufacturers, on condition that they undertake to invest at least half a billion dollars in local production within three years.

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The reversal

In short, everything seemed to be done, so much so that, on the one hand, there was talk of the subcontinent as the cradle of the much-awaited Tesla Model 2 electric car and, on the other, Musk had planned a second trip to India. Instead, nothing as the ceo decided at the last minute to cancel the flight.

Now some local officials report to Bloomberg of a slowdown in the negotiations, which are not expected to be unblocked any time soon due to financial problems and a consequent commitment to invest in the near future. In fact, the company is coming off a six-month downturn compared to the same period last year. So are the plans for the £22,000 car changing?