When Tesla opened pre-orders for its electric Model 3 sedan in India in 2016, Arun Bhat, a businessman from the southern city of Bengaluru and a fan of Elon Musk, was among the first in the country to reserve the car of your dreams in advance. Bhat even got rid of four luxury vehicles to make room for him.

“I thought Tesla would launch in India in the next few years,” says Bhat. “I love the product and the minimalist interior.” Five years later, his wait continues.

The world's most valuable automaker, with a market capitalization now exceeding $1 trillion that makes Musk the richest person in history, is at an all-time high in both profits and sales global this year. The company has a chance to deliver a record 1 million EVs worldwide by 2021. However, after years of floating the idea of ​​selling Teslas in India, Musk has yet to figure out how to do it, even as his focus in the market intensifies. In recent weeks, the company has intensified its push, led by the company's local policy chief, Manuj Khurana, to get a waiver of steep import tariffs that would nearly double the price of imported Teslas. Instead, the Modi government wants Tesla to commit to local production.

India's Ministry of Road Transport and Highways approved four Tesla variants for local sale earlier this year. And while Tesla has yet to announce a formal plan for India, it has already secured retail space in Mumbai, registered an office in Bengaluru and is making key hires to support sales in the country. For now, things are stagnant. Establishing local manufacturing would take at least a year and a large investment from Tesla, and starting sales of imported vehicles is not a start without a tariff break. India's "import tariffs are by far the highest in the world than any other large country." Musk told a local fan on Twitter in July. Without the relief of the waiver, India's import duty means that a Tesla Model 3, which starts at around $44,000 in the United States, would have to sell for around $80,000 in India for the company to turn a profit, according to estimates. local.

“India's import tariffs are the highest in the world by far of any major country!” Musk posted.

But that's not the only obstacle. There is limited EV charging infrastructure, a lack of meaningful incentives for EV buyers, and India's road infrastructure presents challenges. Despite a massive population of 1.38 billion people, India is also a relatively small auto market, with sales of fewer than 3.5 million passenger and commercial cars in 2020. There is even less demand for electric vehicles and luxury cars. Last year, only about 5,000 battery-powered vehicles were purchased in India, such as those made by Bangalore-based Mahindra Electric, accounting for less than 0.5% of total sales.

“It's like what they used to say about China: 'A billion people without money is not a market,'” says Michael Dunne, a longtime Asia auto industry analyst and adviser who runs consultancy Zozo Go , based in San Diego. . “This is how we are with India. You have an active concentration of wealth and then all the others that are surviving. The average median price of a new car sold in India will be less than $10,000, much less than a Tesla."

So why bother? Tesla is growing rapidly around the world, expanding production and sales in China, awaiting permission from the German government to start building electric vehicles at its Giga Berlin plant, and preparing to build its Teslas in Austin, Texas.

India, although the second most populous country in the world, is not a particularly attractive market today, but it does have a growing and tech-savvy middle class. And like China, its consumer market has enormous potential in the long term. The Indian government is also beginning to take steps to encourage sales of electric vehicles to curb toxic emissions, offering incentives to buyers that include lower registration fees and road taxes, although it does not offer the types of incentives that are Come to the United States. And Europe that can generate thousands of dollars. of the purchase price.

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Geopolitical tension between India and China is an added complication as Tesla pressures the Modi government for tariff relief. Roads and Transport Minister Nitin Gadkari has warned the automaker against shipping vehicles built at its Shanghai plant for sale in India, telling Musk to build them locally. “You should make electric cars in India and also export cars from India,” he said in media interviews this month. If Musk agrees to do that, Gadkari said he has assured the CEO that Tesla will receive significant government support.

Billionaire Musk has scoffed at the possibility of production in India as an incentive for a tariff break. “If Tesla can be successful with imported vehicles, then there is a very good chance that a factory exists in India,” Musk tweeted in July. But the Modi government has not budged on its demand that the company commit to local production before considering an exemption or subsidies. Tesla did not respond to email inquiries on the matter, and Tesla executives did not provide an update on the company's plans for the country during its quarterly earnings call in October.

India would be a compelling base to build vehicles for other markets Musk has yet to enter, including much of Southeast Asia, Africa, Latin America, Australia and New Zealand, says Zozo Go's Dunne. Tesla may want to follow the lead of Hyundai Motor, which has turned its India operations into a massive source of exports, shipping more than 1 million cars and crossovers to 88 international markets during its last fiscal year.

In the next few years, an Indian export base could also become "a counterbalance or counterbalance to all the eggs that (Musk) has currently laid in China," Dunne says.

Despite some eager local fans, automotive analyst Bakar Sadik Agwan of GlobalData in Hyderabad, India, sees significant local hurdles for Tesla. Notably, there are so few charging stations that using a Tesla to travel between cities will be impossible unless the company establishes its own network. “They will need a strong sales network, they need a service network, and they also need their own charging infrastructure,” Agwan says.

Price is also a big hurdle. In the United States, the cheapest Tesla Model 3 has a starting price of $40,000. Even if Musk gets a tariff break, that's too expensive for the vast majority of locals, putting Tesla in the luxury car pool. In 2020, Indians bought just 30,000 luxury vehicles, Agwan says.

As a result, Tesla could sell fewer than 150 cars in its first five years in India, according to Soumen Mandal, an analyst at Counterpoint Technology Market Research in Gurugram, India.

Local roads are another challenge. Many are not GPS mapped and traffic in dense cities is often blocked, in some places by cattle and stray dogs. Tesla's autopilot feature "where you just connect the direction from point A to point B will not work in India," says Jay Shah, a businessman from Ahmedabad in western India who has also pre-booked his Tesla. “The roads are not marked, there are animals on the road, there are two-wheelers on the roads, so it is almost impossible.”

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A longtime Tesla fan, Bhat is optimistic he's close to finally getting his vehicle. (He is now more interested in a Model Y compact SUV than the Model 3 he had pre-ordered.) To make sure Musk knows he has local support, Bhat set up a Twitter page with fellow enthusiast Nikhil Chaudhary to "taunt" his hero and share the latest on Tesla's plans in India. In 2020, when Musk was asked by other fans on Twitter if there were any progress on the local launch, the US CEO replied “next year for sure”. The phrase has become an inside joke between Bhat and Chaudhary.

Even if Bhat has to pay a high price for his Tesla, he says it will be worth it given the fuel savings in the long run. But mostly what he really wants is one.

“We have it all figured out,” says Bhat. "Only the car is missing."

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