Discussions between Tesla and India over tax breaks have reached an impasse

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Tesla has been working since 2019 to bring its EVs to the Indian market. It looked like 2021 might be that year after Tesla incorporated in the country, and several cars were seeing testing on local roads.

However, that proved not to be the case. The main stumbling block to Tesla’s launch is the country’s high import taxes on electric vehicles (EVs), which can be as much as 100% on EVs higher with a value higher than $40,000.

Tesla has requested those fees be lowered or eliminated altogether. Government officials say they won’t lower them until Tesla commits to manufacture vehicles locally.

Despite the automaker’s efforts over the last year to overcome the issue, discussions between the two parties have reportedly reached an impasse.

According to a source familiar with the matter that spoke to Reuters, the parties are now in a “weird stalemate situation,” where neither wants to budge on their position.

The source added that Tesla has said it is open to sourcing more parts locally and eventually move towards manufacturing in India, but the government wants a firmer commitment.

Part of the reason for the government’s stance is due to Prime Minster Narendra Modi, who has pushed his administration to boost local manufacturing.

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