Tesla’s India Takeover: EVs Rolling In and Factories Popping Up!
According to sources familiar with the Indian government’s perspective, India is nearing a deal with Tesla Inc. that would enable the American automaker to export its electric vehicles to the country starting next year and establish a manufacturing facility within two years.
The announcement could come at the Vibrant Gujarat Global Summit in January, one of the people said, declining to be identified because the discussions are private. The states of Gujarat, which is Prime Minister Narendra Modi’s home base, Maharashtra and Tamil Nadu are under consideration as they already have established ecosystems for electric vehicles and exports, another person said.
One person said Tesla would commit to any factory with an initial investment of about $2 billion and plan to increase purchases of auto parts from the nation to as much as $15 billion. The US automaker is also looking to make some batteries in India to lower costs, the person said.
No final decision has been made and plans are subject to change, the people said. Tesla CEO Elon Musk said in June that Tesla plans to make a “significant investment” in India and he plans to visit in 2024.
Representatives of the Ministry of Heavy Industries, which oversees India’s auto industry, the Ministry of Finance, and the Ministry of Commerce and Industry did not respond to requests for comment. Tesla also did not respond to a request for comment.
Breaking into the world’s most populous nation, where demand for electric vehicles is growing among aspiring middle-class consumers, would be a boon for Tesla, which currently has factories in the United States, China and Germany. Modi’s government has tried to increase the domestic production of electric cars and encourage the faster introduction of cleaner transport.
Despite these efforts, India’s EV market has not taken off, with battery-powered cars accounting for just 1.3 percent of passenger cars sold last year, according to BloombergNEF. Buyers are hesitant to make the switch due to the high upfront cost of electric cars and the lack of charging stations.
Tesla does not import cars directly to India due to high customs duties. When its first locally made cars go on sale, they could sell for as much as $20,000, some said.
Commerce Secretary Piyush Goyal, who visited Tesla’s factory in Fremont, Calif., earlier this month said in September that Tesla plans to nearly double its purchases of auto parts from India to $1.9 billion this year. The electric car maker procured parts worth $1 billion from the nation last year, he said at an event in New Delhi at the time.
Tesla and India, the world’s third-largest auto market, resumed talks in May after a year-long impasse. Musk has criticized India’s high import taxes and its electric car policy, and India in turn has advised Tesla not to sell cars in the country that are made in its political rival China.
India is now said to be considering reducing import taxes for international electric vehicle manufacturers for five years if these companies eventually commit to setting up local factories.
