Ford and Tesla Send a Big Warning to India

The match between Tesla  (TSLA) – Get Tesla Inc Report and Ford  (F) – Get Ford Motor Company Report has intensified, as Ford has begun producing and delivering the F-150 Lightning electric pickup. 

The legacy automaker hopes that the electric version of the best-selling F-150 will appeal to both buyers of traditional pickups and consumers interested in the greener options among EVs.   

The F-150 Lightning aims to enable Ford to reduce the EV gap with Tesla, which currently dominates the sector with nearly a million vehicles delivered in 2021. 

Chief Executive Elon Musk’s firm hopes to deliver at least 1.5 million vehicles in 2022 despite disruptions to supply chains and the resurgence of covid-19 in China. The pandemic has forced Tesla to halt production for many weeks at its Shanghai factory, which serves the Asian and European markets.

While both companies await the scheduled 2023 arrival of Tesla’s futuristic Cybertruck, Ford seems to have taken the edge in the lucrative segment of trucks/pickups over Tesla. Ford CEO Jim Farley has cited Tesla as his company’s main competitor.

While Musk doesn’t see other EV makers as his rivals — the billionaire says it’s oil giant Saudi Aramco — the tech tycoon still wants to sell Tesla vehicles worldwide. And one of the best ways to do that is to be present in key markets. 

One of those markets is India. The Indian government has said that the country will be carbon-neutral by 2070. So many companies will receive subsidies and state support to produce electric vehicles.

Tesla Won’t Soon Manufacture Cars in India

But Musk has just ruled out the possibility that Tesla soon would open a factory there. The disruptor in chief has promised that this year he’ll unveil the next locations of its factories.

“Is Tesla manufacturing a plant in India in future?” a Twitter user asked Musk on May 27.

“Tesla will not put a manufacturing plant in any location where we are not allowed first to sell & service cars,” Musk responded.

What’s interesting about his remark is that it might be a veiled effort by Musk to pressure the Indian government. 

Tesla and the Indian government for more than two years have been negotiating to enable the company to establish itself in the country. The authorities there have made clear that they want the manufacturer to assemble on site the vehicles that it wants to sell to Indians. 

In the meantime, Tesla must pay heavy import taxes if it wants to sell in India vehicles that it produced elsewhere. 

Tesla, for its part, wants low import taxes so it can sell low-cost EVs in the country, perhaps one as cheap as $25,000.

Scroll to Continue

TheStreet Recommends

“If Elon Musk is ready to manufacture Tesla in India, then there is no problem,” India Road Transport Minister Nitin Gadkari said in April, according to local media. He added that India doesn’t think producing cars in China and selling them in India is a “good proposition.”

“Still working through a lot of challenges with the government,” Musk said on Jan. 12 when asked about Tesla’s launch in India.

The company registered an office in Bengaluru in the southern Indian state of Karnataka in 2021. Local authorities said then that the company was thinking of setting up a factory in the state.

Ford Is in Final Talks to Sell a Plant to Tata Motors

As for Ford, the Dearborn, Mich., auto veteran after months of discussion has decided to abandon plans to assemble electric vehicles in India.

“As part of the ongoing business restructuring in India, Ford has continued to explore possible alternatives for its manufacturing facilities,” Ford India’s spokesperson, Kapil Sharma, told TheStreet in an emailed statement. 

“This included applying for the production-linked incentives scheme, which allowed us to explore utilizing one of the plants as a potential EV manufacturing base.

“After careful review, we have decided to no longer pursue EV manufacturing for exports from any of the Indian plants.”

This decision is a real U-turn because the Indian government had approved the company’s request for its proposal under the production-linked incentive scheme for the automobile sector.

The PLI offers considerable advantages, including tax rebates, to companies investing in advanced technologies in the sector. 

As TheStreet previously reported, the provincial government in Tamil Nadu and Ford were in discussions to explore whether the automaker’s factory there could be converted to a plant manufacturing and exporting electric vehicles.

Ford has a plant in Maraimalai Nagar, Tamil Nadu, in western India. It’s well known as the Chennai assembly plant, or the Chennai vehicle and engine assembly plant. It is one of the production plants that Ford owned in the country and plans to close by the end of June.

The legacy manufacturer is in talks with Tata Motors  (TTM) – Get Tata Motors Ltd. Report to sell one plant.

“In line with our efforts to find an alternative for our vehicle manufacturing operations in Sanand, we are in discussions with Tata Motors,” the spokesperson told TheStreet. “We look forward to continuing our discussions over the coming weeks as we work to finalize an agreement.”

Last September, Ford said it was ending vehicle production in India after racking up a $2 billion loss over 10 years in the market of 1.4 billion people.