Tesla Motors Inc (NASDAQ:TSLA) is planning to enter the Indian market with its upcoming sedan, according to the Economic Times. For emerging markets like India, Tesla is working on its third-generation four-door sedan code named Model 3, which is smaller and more affordable than the firm’s current offerings.

Tesla Motors Inc Plans To Enter India

High import duty a concern

According to Tesla Motors chief information officer Jay Vijayan, the company is targeting $30,000 to $40,000 price range (approx. Rs 18-24 lakh) for the Model 3 making it an “ideal product in the luxury car segment.”

The Tesla Model S is priced over $100,000 (around Rs. 61 lakh). The executive noted that a support from the Indian government will be essential to make its cars a success in the country. In the U.S., each electric car enjoys a direct subsidy of at least $7,500.

According to the executive, the sedan will be priced at less than half of the existing model, and this is despite the fact that India has a high import duty. Talking about the import duty, Vijayan noted that India has one of the highest import duties in the world (over 100%). This is of import to Tesla as it will be importing the cars from its plants at Freemont in the U.S. or the assembly unit in Netherlands.

Will Tesla set up manufacturing plant in India?

Hinting on setting up a manufacturing plant in the country, the executive says that they have “identified India is one of the potential markets in Asia to have a local assembly plant,” but they do require government support in making the electric vehicles popular. The U.S. firm plans to have a talk with the authorities over rationalizing the import duty on electric cars along with creating a different category for such vehicles.

Tesla Motors Inc (NASDAQ:TSLA) is currently selling its vehicles in just two Asian countries — China and Japan. Last year in Japan and China it sold around 5000 and 2000 cars respectively. India, which is the third-largest market in Asia for automobiles, was the obvious choice after these two countries.

Electric cars have not been able to gain much traction to date in India. Bangalore-based Reva, which is now a part of Mahindra & Mahindra, has not enjoyed much success to date despite the fact that it has been selling  electric cars for more than a decade now. Many factors can be cited for the lack of popularity of electric cars in India, including high-prices, limited drivability and lack of infrastructure.