Elon Musk is something of a notorious workaholic so it’s unusual that he would pass up a chance at a potentially lucrative deal that could see Tesla enter the world’s third largest car market.
Yet the entrepreneur was missing in action on Monday when India’s prime minister, Narendra Modi, dispatched a senior member of his government in the midst of religious Diwali festivities to meet with the tycoon at his Fremont factory in California on Monday.
Why the Tesla CEO was a no-show is not exactly clear, but India’s minister of industry and commerce may have inadvertently let slip the cause.
“I wish him a speedy recovery,” Piyush Goyal posted to social media, adding he missed Musk’s “magnetic presence” during his tour of Tesla’s second largest manufacturing plant.
Musk, who relayed his apologies and pledged to make it up to Modi’s minister, has complained of severe back pain in recent months in connection with his intense work schedule as he fought to save Twitter from bankruptcy.
In August, Musk revealed the need for “minor surgery” to correct a problem in which his right shoulder blade rubbed up against his rib cage.
“Recovery will only take a few months,” he wrote at the time.
It was an honor to have you visit Tesla!
My apologies for not being able to travel to California today, but I look forward to meeting at a future date.
— Elon Musk (@elonmusk) November 14, 2023
Tesla and the Modi government are attempting to strike a win-win deal that could see the world’s most valuable carmaker set up a vehicle manufacturing plant in India as part of its entry into the country. It would be the sixth Tesla factory after Musk disclosed plans in March to build his next gigafactory in Mexico for his upcoming entry EV touted to cost $25,000 when it goes on sale at an undisclosed date.
Huge growth in India’s car market since the pandemic
India is a prime target for Tesla having eclipsed Japan last year to become the third largest market for passenger cars. According to industry data, some 3.79 million vehicles were registered new in 2022, accounting for a share of roughly 5.3% of global car demand.
While gains have since slowed from its breakneck pace during the first nine months of this year, India is still 40% above the same period from 2019. By comparison, Japan is 12% below pre-crisis levels and the gap is even slightly higher in Germany, the fifth largest market, which is down 13%.
Despite India’s booming population and hungry demand for mobility, the government erected punitively high tariff barriers as a means of encouraging local investment, which has impeded Tesla’s entry for years.
All cars imported in a fully finished state into the country, EVs included, are liable for a minimum 70% import duty. Those worth more than $40,000 will see the full price of the vehicle tacked on as tax on top, meaning only very wealthy Indian consumer could afford a Tesla.
Economic reformer Modi faces general elections
Modi’s Hindu nationalist BJP party faces off against the Congress party in general elections expected to be held in the spring of next year, however. A prestigious billion-dollar investment by Musk would go a long way in bolstering the prime minister’s reputation as an economic reformer.
Consequently, his government is considering whether to reduce the punitive import tariffs—increased only earlier this year for mass market vehicles—to a flat rate of 15% that would apply to all electric vehicles, including those from Tesla’s low-cost rivals like BYD in neighboring China.
For Modi’s industry minister, the jaunt to San Francisco in the middle of the Hindu festival of Diwali wasn’t a total loss at least.
Goyal was still able to meet with U.S. Trade Representative Katherine Tai to coordinate policies ahead of February’s crucial World Trade Organization conference typically held every other year.