Tesla signals eased tensions with country after buying nearly $2 billion of auto parts: ‘We will come out with a policy’

Relations between Tesla and India seem to be improving, as the country’s Commerce and Industry Minister Piyush Goyal has said the electric vehicle giant will source around $1.9 billion worth of auto parts from the nation in 2023, BNN Bloomberg reported.

There have been tensions between the two parties after Tesla CEO Elon Musk called on the Indian government to reduce import tax on vehicles from 100% to 40%, according to Business Today. That levy applies to vehicles that cost more than $40,000, so many of Tesla’s models would be affected.

But criticism was lobbed in the other direction, with India’s Union Minister for Road Transport and Highways Nitin Gadkari requesting that Tesla not sell cars in India that were made in China, per Business Today.

Regarding whether India would consider reducing taxes on imported EVs per Tesla’s demand, Goyal said, “We will come out with a policy which will be in consultation with all stakeholders.”

The suggestion that Tesla will now source more of its car parts from India signals a softening of the relationship, although Tesla still bought around $1 billion in components from the country in 2022, according to BNN Bloomberg.