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India is reportedly working on a new electric vehicle (EV) policy that could reduce import taxes for automakers committing to local manufacturing. This policy comes in response to a proposal from Tesla, which is exploring entry into the Indian market.

Under consideration is a plan to allow automakers to import fully-built EVs into India at a reduced tax rate, possibly as low as 15%. Currently, the tax rate for imported cars above $40,000 is 100%, and it is 70% for others.

The policy could potentially make it significantly cheaper for Tesla and other global automakers to sell their imported EVs in India, thus boosting their presence in the world’s third-largest car market.

Shares of Indian car manufacturers, including Tata Motors and Mahindra and Mahindra, dropped on this news, reflecting concerns about potential competition from imported EVs.
India’s government is proceeding with caution as it considers this policy due to potential disruption to the local market and its impact on domestic automakers investing in local EV production.

This policy proposal is in its early stages, and the final tax rate could change after further deliberation.

Tesla’s interest in the Indian market is reportedly connected to its desire to establish a local factory and manufacture a new EV priced around $24,000 for both the Indian and export markets.

Tesla is said to have conveyed its intent to set up a potential factory at full capacity by 2030, and Indian Prime Minister Narendra Modi has been tracking progress following discussions with CEO Elon Musk.

Tesla already has manufacturing facilities in China and Germany, with plans for a new plant in Mexico focusing on a mass-market EV platform.

Tesla Inc. (TSLA) concluded the day with a decline of approximately 2.8%, settling at around $230. The market experienced pressure stemming from yesterday’s tight labor data, potentially reinforcing central bankers’ commitment to a hawkish stance. The speeches scheduled for today’s Jackson Hole conference might induce wider and higher price ranges across the markets.

Absorption is anticipated to linger around yesterday’s lows, providing an opportunity for core buyers to potentially augment their long positions. At present, the calculated fair value price is situated around $268, which could imply a bullish nuance for the stock. However, this scenario hinges on the outcomes of today’s speeches and the ensuing direction of monetary policy.

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