Elon Musk's disconnect dampens India's Tesla investment hopes


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India does not expect Tesla Inc to go ahead with an investment in the country in the near future after executives from Elon Musk's electric car maker have stopped contacting the country, according to people familiar with the matter.

Musk's team has not received any further inquiries from authorities in New Delhi after the billionaire postponed a trip to India in late April, the people said, asking not to be identified as they are not authorized to speak publicly. The government has been persuaded that Tesla has capital issues and does not plan new investments in India in the near future, they said.

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The drop in interest in India comes as Tesla posted a second consecutive drop in quarterly deliveries globally and faces tough competition in China. Musk announced massive staff cuts in April, the EV maker's first new model in years, the Cybertruck, is rolling out at a slow pace while construction of a new plant in Mexico has been delayed.

Representatives from India's Ministry of Heavy Industries, which oversees the automobile sector, and the ministries of finance, commerce and industry did not respond to requests for comment. Tesla also did not respond to a request for comment.

In April, Musk had cancelled his planned visit to India, which included a meeting with Prime Minister Narendra Modi, citing immediate problems at the company.

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He announced his visit weeks after India lowered import taxes on electric vehicles from foreign carmakers who pledged to invest at least 41.5 billion rupees ($497 million) and start producing electric vehicles at local factories within three years.

Instead, the Indian government is pinning its hopes on domestic automakers such as Tata Motors Ltd. and Mahindra & Mahindra Ltd. to boost EV production, the people said. If Musk decides to re-engage, Tesla is welcome to take advantage of the new import tax policy, they added.

India's EV market is still in its infancy, with battery-powered cars accounting for just 1.3% of total sales last year, according to BloombergNEF. The high upfront cost of electric cars and a lack of charging stations make many buyers hesitant to make the switch.

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