Tesla's factory in India to come up by 2025
What's the story
Tesla is reportedly nearing a deal with India, which would enable the US electric vehicle (EV) manufacturer to import its cars here starting next year, and set up a production facility within two years. Sources familiar with the Indian government's plans suggest that an announcement may be made at the Vibrant Gujarat Global Summit in January. Gujarat, Maharashtra, and Tamil Nadu are being considered as potential locations due to their well-developed EV and export ecosystems.
Details
Initial investment is set for $2 billion
The US automaker is anticipated to initially invest approximately $2 billion in any chosen plant, with intentions to expand its auto parts purchases from India to as much as $15 billion. Tesla also aims to produce some batteries in India to lower expenses. No final decision has been reached yet, and plans could still change. In June, Tesla CEO Elon Musk mentioned that the company is planning a "significant investment" in India and intends to visit in 2024.
Scenario
Breaking into India's EV market would be advantageous for Tesla
Tesla's entry into the Indian market, where middle-class consumers are increasingly interested in electric vehicles, would be advantageous for the company, which currently operates factories in the US, China, and Germany. Prime Minister Narendra Modi's administration has been advocating for greater domestic EV production and a faster transition to cleaner transportation. Nevertheless, India's EV market has been slow to develop, with battery-powered cars representing only 1.3% of total passenger vehicles sold last year.
Insights
Locally produced vehicles could sell for as low as $20,000
Tesla's locally produced vehicles could be priced as low as $20,000 (around Rs. 16.7 lakh). Separately, India is contemplating reducing import taxes for international EV manufacturers for five years if they commit to establishing local factories. Earlier this month, Trade Minister Piyush Goyal visited Tesla's California plant and stated that Tesla intends to nearly double its auto parts purchases from India to $1.9 billion this year.