Aditi Sharma

NEW DELHI, Reuters – Tesla (NASDAQ) Inc said that it is still working with India’s government to resolve many of its challenges. This was in response to a tweet (NYSE:) by Elon Musk, the billionaire chief executive, about when the company would start selling electric cars in India.

Tesla planned to sell imported cars to India in the last year. It has been lobbying for the Indian government to reduce import taxes before entering the market. In October, it took its demands to Indian Prime Minister Narendra Modi’s office https://reut.rs/3GomP9N.

Musk did not identify the challenges in his tweet.

Indian demand for premium EVs remains in its infancy. There is also a lack of charging infrastructure. Of the total 2.4 millions cars sold in India, only 5,000 were electric. A few luxury vehicles were also included.

India has a 100% import duty on cars imported from India, which Musk stated previously is among the highest. Analysts believe that Tesla cars at such high prices would be too expensive for most buyers and will reduce sales.

Tesla’s demands for tax cuts – first reported by Reuters in July https://reut.rs/3K7PJgr – have prompted objections from several local players, who say such a move would deter investment in domestic manufacturing.

Indian officials also have a split opinion about the demands of U.S. carmaker. Officials want Tesla to support local production before tax cuts are considered. However, Tesla indicated that it is open to trying imports first.

Even as Tesla is holding out for a cut in import duties, luxury carmaker Mercedes-Benz will start assembling https://reut.rs/3HY8ykl the electric version of its flagship S-Class sedan, the EQS, in India later this year.