Tesla to scout locations for Indian EV factory by April-end
Tesla, the electric vehicle (EV) manufacturer led by Elon Musk, is reportedly planning to send a team to India by late April. The objective of this mission is to scout potential locations for a proposed electric car factory, estimated to be worth between $2 billion and $3 billion, according to the UK's Financial Times. The team will primarily focus on states with established automotive industries like Maharashtra, Gujarat, and Tamil Nadu.
India's tax reductions attract Tesla's attention
This move by Tesla comes in the wake of India's recent decision to lower import taxes on certain EVs. The tax reduction is applicable to car manufacturers who commit to investing a minimum of ₹4,150 crore, and start commercial production within three years. This strategic expansion into India by Tesla coincides with a period when EV demand is leveling off, and competition is intensifying in its primary markets - the US and China.
Tesla is considering establishing battery plant in India
The Financial Times report also suggests that Tesla might consider establishing its own battery factory in India. This would replicate the "gigafactory" model currently employed at its plants in California, Texas, Berlin, and Shanghai. These factories are distinguished by their suppliers operating within close proximity to the main plant, ensuring efficient production and supply chain management.
Tesla's entry into India is long-awaited
Tesla's entry in India has been delayed due to regulatory hurdles. The Indian government has insisted on an adherence to local manufacturing as a prerequisite for market entry. Over the past year, Tesla representatives have been in discussions with government officials, culminating in a meeting between Musk and Prime Minister Narendra Modi last June. This development signifies Tesla's serious intent to establish its presence in the Indian automotive industry.
Tesla's potential impact on India's EV market
In July last year, Tesla expressed interest in building an Indian factory to manufacture an EV priced at $24,000 (around ₹20 lakh). The firm also advocated for reduced taxes on higher-priced models intended for sale in India. Analysts predict that Tesla's potential arrival could stimulate further EV investments and provide a boost for Indian auto parts manufacturers, thereby contributing to the growth of the country's automotive industry.
India's EV policy: A catalyst for global technology access
India's EV policy mandates that within three years of entering the market, 25% of a company's operations must be localized, rising to 50% by the fifth year. In return, companies can benefit from a reduced custom duty of 15% on CBUs. This policy applies to cars priced at a minimum of $35,000 (approximately ₹29 lakh), including cost, insurance, and freight charges. Industry experts believe this could provide the Indian automotive industry with access to global technologies and enhance cost competitiveness.
