Tesla restarts search for New Delhi showroom with India’s DLF, sources say

By Aditi Shah and Aditya Kalra

NEW DELHI (Reuters) -Elon Musk’s Tesla (NASDAQ:) has resumed its search for showroom space in New Delhi, two sources told Reuters, in the first sign it is rethinking entering the Indian market after putting its investment plans on hold earlier this year.

Musk said in April he would meet Indian Prime Minister Narendra Modi during a trip where he was to potentially announce an investment of $2-3 billion in India. However, he called off his visit at the last moment after Tesla decided to sack 10% of its staff amid falling sales.

Tesla, which had paused its search for a showroom in India in recent months, is now in early-stage talks with DLF (NS:) to help secure space in the capital region, said the two sources, who have direct knowledge of the situation.

A third source said it is not certain that Tesla’s talks with India’s biggest property developer will lead to a deal and the electric vehicle giant is also in discussions with others.

Tesla and DLF did not respond to requests for comment.

One of the sources said Tesla is looking for 3,000 to 5,000 square feet (280-465 square metres) to create a consumer experience centre as well as a space three times larger for its delivery and service operations.

Tesla is evaluating multiple locations including DLF’s Avenue Mall in southern Delhi and the Cyber Hub office and retail complex in nearby Gurugram city, the source added.

Foreign retailers including Japan’s Uniqlo, Spain’s Mango and Britain’s Marks and Spencer (LON:) also have outlets in the Avenue Mall, where Tesla is looking to secure an 8,000 square feet showroom space, the second source said.

Tesla’s search is still “exploratory” and nothing has been finalised, the first source said.

It was not immediately clear whether Tesla will consider importing cars at the tax rate of as high as 100% or if it will make investment commitments under India’s new policy, which would allow it to import certain EVs at a lower rate of 15%.

After Tesla did not deliver on earlier investment plans, India’s government is trying to relax certain provisions of its policy to attract automakers such as Hyundai Motor (OTC:) and Toyota (NYSE:) which have expressed initial interest.

India’s EV market is small, making up about 2% of total car sales of 4 million last year, but the government wants to increase the share to 30% by 2030.

Tesla’s showroom hunt comes as Musk’s Starlink is also considering entering India after winning a lobbying battle against billionaire Mukesh Ambani over how New Delhi should allocate spectrum for the service.