Is Elon Musk Losing Home Turf? 

About a month ago, we read reports around how Prime Minister Narendra Modi wanted his officials to smoothen the road for billionaire Elon Musk’s Tesla to drive in. Reports of an imminent reduction in import tariffs to facilitate the journey amidst stiff opposition from home grown EV maker Tata Motors also flitted in. At that time it made us wonder why now? 

A recent spate of events back home seems to suggest that Musk’s extended honeymoon with his audience could be coming to a close. The recent launch of Tesla’s Cybertruck was one event where the hype didn’t match the outcome (now, haven’t we seen that before?). The stainless steel monstrosity didn’t arrive on time and wasn’t all that it was meant to be. 

What’s Cybertruck and how’s it performing?

Early reviews remain divided, as they always have been with anything that the billionaire innovator touches. While celebrities such as Jay Leno went gaga driving the truck and claimed it contained features that were wow-worthy, Others felt it to be a case of much ado over nothing though they did agree that the Cybertruck offered all that they expect in a pick-up vehicle. 

And here’s how TopGear, the auto website with a large fan following, described their experience: 

“In our two days with it, public feedback ranged from denial to awe. But we were in an affluent beach suburb of LA. It would be a different story in middle of nowhere America where pick-ups are religion, and function always outpoints form.

Musk’s middle finger salute to advertisers

If you thought something like this could deter Musk from pulling back his audience, you’re mistaken. Because what he came up with on his recently acquired social platform when advertisers asked questions, is what told its own tale. For readers not conversant with this incident, Musk asked advertisers to “go, fuck (themselves). 

The origins of this spat came in the form of several companies, including Disney, Apple, IBM, Comcast, Lionsgate, Warner Bros. Sony Pictures etc. paused their ad spends on the X (formerly Twitter) platform last month over questions around Musk’s antisemitism. They began pulling back after Musk appeared to endorse an antisemitic conspiracy theory. 

However, this was seen as the last straw by the advertisers, who had raised the flag in the first month after Musk’s takeover when several fake and unverified accounts came up that made erroneous claims about products. The one that comes to mind is a bogus account claiming that Pharma major Eli Lilly would provide free insulin to customers. This led to the company’s stock price taking an almost immediate hit. 

Advertisers were also wary about X reinstating several thousand accounts banned previously, largely for their extremist and hateful posts. Things went from bad to worse when Musk decided to disband a Trust and Safety Council, made up of 100 independent civil, human rights and other organizations. 

Reports by the New York Times also suggested that the company could lose more than $75 million revenue by end-2023. Insider Intelligence claimed that the company’s revenues would drop to around $1.89 billion from around $4 billion recorded in 2022 under Jack Dorsey. In fact, there were news reports that some of the ads were actually running alongside pro-Nazi posts. 

Will India welcome Tesla with open arms?

Now swing around to Musk’s mechanizations in India. After his meeting with Modi last June, things have picked up pace for Tesla’s imminent arrival. A report published in the Times of India notes that a meeting of representatives from the ministries of commerce and industry, heavy industry and electronics and information technology had discussions at the PMO around how to make Tesla’s ride into India smooth. 

In fact, the report noted that government departments were asked to resolve any issues that may arise with Tesla’s plans for an India launch. Of course, the crucial point of debate is the issue of import duty that comes to 100% for imported cars (above $40,000) and 60% for vehicles below that price point. 

This could render the Tesla vehicles beyond the segment that rests below the luxury car buyers category. Tesla itself has sought a peak import duty of 40% for its imports and on earlier occasions union ministers had insisted that Tesla bring in capital investment to set up plants in India and refrain from taking the knocked-down-kits route. 

Will Musk bite the bullet and invest in India?

Of course, it remains to be seen how much the government is willing to bend as domestic players led by Tata Motors (the largest EV player in India) have been lobbying with officials to not lower the import duties on EVs. With statements coming from Modi and his top ministers around the need to boost domestic manufacturing, Musk could be on a sticky wicket.

Also, the government has reiterated time and again about having a domestic production base of EVs with a focus on the export markets as Prime Minister Modi has propagated the “Make in India” story for some years now. To allow a foreign manufacturer to import cars without actually spending money on manufacturing might just queer the pitch for the government. 

Does that mean Musk would open his considerably large purse to step up investments in India at the cost of bolstering production capacity back home? Well, if he does so, one can be sure that the Musk Magic is waning back home. For, who would want to cut off the branch on which they are actually sitting?