Space technology electric vehicle factory: All eyes on X ahead of Elon Musk’s visit

On October 2, 2020, a Tesla fan club in India had asked Elon Musk on X (then Twitter) about the progress of the company’s entry into India. “Next year for sure,” Musk had replied.

The official confirmation of his interest came just two months later when Road Transport and Highways Minister Nitin Gadkari announced that Tesla would come in the following year and set up a distribution facility (sales centre) for its cars in the country. And if there was demand, we could also set up production here.

After more than three and a half years of hot and cold on both sides – to the point where his plans were temporarily shelved – Musk, the founder of Tesla and CEO of SpaceX, will now arrive in India on Sunday for a two-day visit. Ahead of the high-profile visit, X, also owned by Musk, is being followed by people eager to know more about his India trip, which is likely to range from a meeting with Prime Minister Narendra Modi at his hometown to a space project with startups in Bharat. Mandapam in

He is expected to announce that Tesla will set up a car and battery factory and will also push ahead with plans to launch Starlink’s satellite-based mobile broadband services, which are already available in 70 countries.

Musk is still waiting for the government to issue the crucial GMCS license needed to launch broadband services.

The Starlink application was submitted in November 2022.

It’s been a rollercoaster ride for Musk. In 2021, he released a plan for company-owned showrooms to sell imported Tesla models in India. A new company, a 100 percent subsidiary, was established in Bengaluru: Tesla India Motors and Energy Private Ltd.

It received homologation certificates from the government, which meant an approval for the technical condition of Tesla’s Model 3 and Model Y.

But soon the battle lines were drawn. Tata and Maruti Suzuki complained to the government, through industry body SIAM, that Tesla’s entry through imports would create an uneven playing field, especially as domestic companies like themselves were subject to strict localization rules.

Tesla’s plan to set up single-brand outlets also came under scrutiny. Tesla was expected to balance its sourcing of goods from India for global operations against the mandatory 30 percent sourcing requirement. The question was whether Tesla purchased sufficient components for its global activities.

In a series of tweets, Musk expressed his frustration and made it clear that India’s import duty on fully built-up vehicles of between 60 and 100 percent was the highest in the world. He wanted to lower it to 40 percent. He also wanted a differentiated customs duty structure for electric vehicles and ICE, because imposing similar duties was ‘contrary to climate objectives’.

But the government asked Tesla to produce the vehicles in India first instead of importing them from China and then talk about duty cuts.

By 2022, it was clear that Musk had decided to put his India plans on hold. In May, he said he would not set up production at any location unless he was allowed to sell and service cars. He redeployed his India team to other countries.

But a meeting in New York with Modi in June 2023 led to Musk saying afterwards: “I’m a fan of Modi” and reviving his plans for India. A month before the meeting, top Tesla officials had come to India to look at doubling its purchasing and met with senior government officials.

Ultimately, a solution was devised that both protected domestic automakers and allowed Tesla to enter the country.

A new electric vehicle policy reduced imports of cars with a CIF value of $35,000. In return, automakers had to invest at least $500 million in a factory in India over three years, with domestic value growth up to 50 percent in five years.

Musk also faced serious challenges in rolling out his satellite broadband services. Starlink set out an ambitious plan in 2021 to deploy 200,000 of its devices, 80 percent of which would be in rural areas by December 2022. But the plan never got off the ground.

Instead, the company found itself in a serious mess when the Ministry of Telecommunications reprimanded Starlink for taking $99 pre-bookings from 5,000 strange customers, even though the company had failed to receive the GMPCS license it needed to to operate in India.

It was forced to return the money and Musk’s friend from Paypal, Sanjay Bhargava, who ran the operation, decided to quit in December 2021.

Musk was also forced to readjust his strategy for India and applied for the license, but only for business-to-business services and not to connect homes in the country (point-to-point) like his competitors One Web and Reliance.

But Starlink may have to wait months before services begin. In addition to the permit, permission must be obtained from the space regulator. And telecom regulator Trai has not yet proposed the government-regulated price for satellite operators.

First print: April 19, 2024 | 11:38 PM IST