How Elon Musk blindsided Narendra Modi with a cancelled India trip

“Looking forward to meeting with Prime Minister Narendra Modi in India!” Elon Musk posted on his social media platform X in April.

The billionaire was eagerly anticipating the visit, not just to scout a location for Tesla’s new $3bn electric vehicle “gigafactory”, but also for a family holiday. He had arranged for his mother, three of his children and their two childminders to accompany him, according to two people familiar with the plans.

Just 10 days later, he cancelled the trip, citing “very heavy Tesla obligations” and promising to return later in the year. Indian government officials, who had hosted Tesla executives on past visits and prepared about 20 visas for the delegation due in April, were left waiting.

The abrupt change of plan sparked speculation in India, where an expected Tesla investment was seen as a coup for Modi. Confusion about Musk’s commitment to the country increased when he met Premier Li Qiang in China, which India views as a geopolitical rival.

Employees close to Musk had persuaded him to call off his trip — despite the potential consequences of snubbing Modi as India’s election was getting under way — because of an unmissable opportunity in China, said people with knowledge of the discussions. During his Beijing trip, Musk sealed a deal that moved him closer to his goal of bringing full self-driving technology to China, the world’s largest car market.

Tesla remained committed to a plant in India in the long term, said people with direct knowledge of the matter, adding that Musk was “obsessed” with the country for its potential as a market and as a hub to build cars for export.

“Musk wants to be everywhere, and that’s how he operates, so he needs both China and India,” said one person close to Tesla’s India plans. “While some egos may have been hurt when Musk cancelled the trip, as a country, India still needs Tesla to show that it is a great country to make investments in electric vehicles.”

Officials in India, the world’s third-largest car market, are nervously waiting to see whether Tesla will register for a scheme allowing lower tariffs on higher-priced imported EVs for companies that commit to making them in the country within three years — something Tesla has long sought. The scheme begins taking applications this month and would require the company to pledge an investment in India in exchange for lower duties.

A Tesla plant would be a marquee investment by a US company in India’s under-developed EV sector, an industry that rival China currently dominates.

Since the cancelled visit, local officials have not held discussions on the tariffs with Tesla, two people familiar with the matter said, although the complex scheme has not received much interest from other foreign carmakers either.

Any expansion into India would entail significant risks for Tesla at a time when EV sales are slowing globally. Carmakers from Ford and General Motors to Toyota have struggled in a crowded market where local brands are battling to fend off foreign manufacturers. Tesla itself is undergoing upheaval, with deep job cuts and a strategic pivot towards autonomous driving and artificial intelligence.

According to people with knowledge of the situation, Musk’s interest became serious around 2019 despite his refusal to produce cars locally at the time. Efforts to expand in India were led by Tesla’s global head of policy and business development Rohan Patel, a former energy adviser to President Barack Obama, who hired about a dozen people to negotiate with Indian officials.

By 2022, Musk had become increasingly confident about the prospects of building EVs in India. When he met Modi in New York in 2023, he said Tesla would try to be in India “as soon as humanly possible”. Executives paid several visits to the country, with commerce minister Piyush Goyal serving as the Modi government’s main liaison.

People briefed on Tesla’s plans for India said it was looking at investing $2bn-$3bn over three years. The proposed plant would have a target capacity of as many as 500,000 cars a year, most of which would be exported. Tesla also discussed investing in its own battery facility.

The talks accelerated after New Delhi announced its scheme for lower tariffs on higher-priced imported EVs. At around the same time, the company began making right-hand drive vehicles at its factory near Berlin, intended for export to India.

But behind the scenes, obstacles to a big India announcement were emerging.

News landed that Tesla might get a breakthrough agreement in China regarding deployment of its full self-driving system. One person with knowledge of the discussions said Musk was worried about embarrassing Modi by cancelling his trip but was told by his team to focus on China — and called off the visit.

Days before cancelling his India trip, Musk had also sent out an internal memo disclosing that more than 10 per cent of Tesla’s staff would be laid off, including the division that runs its industry-leading “Supercharger” network and the company’s entire public policy unit. There was internal opposition to announcing an investment in India at a time of swingeing job and cost cuts in the company, two of the people said.

Patel was among those let go, leaving Indian government officials blindsided when Musk made his surprise appearance in Beijing. Since then, officials have struggled to find counterparts at Tesla to discuss its plans in India.

Some Indian officials have speculated that Musk was reacting to delays in regulatory approval for his Starlink satellite business to operate in India, where the space-based telecoms business is taking off. However, another person close to the matter said issues at Starlink did not affect Musk’s decision to call off the trip.

Tesla and Musk did not respond to requests for comment.

Musk’s gamble to prioritise China — the world’s largest EV market with 60 per cent of all sales — appears to have paid off. Tesla is reportedly already trialling its full self-driving technology in Shanghai after signing a lane-level mapping and navigation contract with Baidu — a deal that was unlocked by his visit. Also this month, Tesla became the first foreign-owned carmaker to be included on a Chinese local government’s list of electric vehicles that can be bought by public, party and government groups.

In the short term, any additional sales are crucial for Tesla, which is facing a downturn in deliveries as its top-selling Model Y and Model 3 vehicles approach saturation point in the US market.

Longer term, getting full self-driving approval in China and “solving autonomy” for cars is critical for Musk’s strategy to run a fleet of hundreds of millions of robotaxis and reposition Tesla as a leader in AI.

Despite the snub during a tight election campaign, Modi still appears open to another visit from Musk, with the pair exchanging messages on X after the prime minister’s victory last month.

In New Delhi, several officials expressed confidence that Tesla had not lost interest in the market. One official said: “The general drift is they will be coming sooner or later.”

Additional reporting by Benjamin Parkin and Jyotsna Singh in New Delhi