Tesla, world’s leading Indian electric vehicles (EV) manufacturer, has witnessed a slowing demand in its main markets of the U.S. and China.
Electric vehicle giant Tesla is looking to venture into the Indian market, and as per a report in Financial Times, the company’s officials would be scouting locations in India this month for a potential $2 billion to $3 billion electric car plant. The development comes after the Indian government confirmed recent reduction in tariffs on higher-priced imported electric vehicles (EVs) for all companies that undertake production within three years in India.
Aiding Prime Minister Narendra Modi's government ahead of parliamentary elections, Tesla's latest investment was also hinted at during his meeting with Elon Musk in the US last year. “He (Modi) wants to be open, he wants to be supportive of new companies and make sure it accrues to India's advantage. Which is, obviously, that's the job,” Musk had confirmed post his meeting with the prime minister.
In fact, as per a report in Hindustan Times, Tesla was already in advanced talks to enter the Indian market, with an aim to invest $30 billion over the next five years. The company might also set up a battery plant in India, like its earlier "gigafactory" model seen in California, Texas, Berlin, and Shanghai.
If the investment comes through, it would be a huge boost to India’s manufacturing aspirations, since India has already allocated substantial subsidies to pump up manufacturing, particularly in crucial sectors like EVs.
However, amid its massive plans to venture into India, Tesla recently reported sharply lower first-quarter auto sales and the demand outlook for electric vehicles remains underwhelming. On the other hand, legacy players including Toyota saw a rise in sales.
Elon Musk's auto giant saw sales down by 8.5 percent, and a weak sales market in China, where it faces tough competition from local electric vehicle (EV) makers.
Among other automakers, apart from Tesla, General Motors too witnessed a slight dip in sales. While there is an expected six percent rise in overall sales in the quarter, consumers still might face toughness from the higher interest rates.
Nonetheless, seeing the drop, Tesla claimed it is due to production ramp-up of updated Model 3 at its California factory being hit, the shipping diversions caused by the Red Sea conflict, along with its attack on Gigafactory Berlin. Financial services firm Morningstar, meanwhile, cited the decline due to “slowdown in demand for Tesla's vehicles, as the company's competitors, particularly in China, may have cut prices more than Tesla to win consumers."
Tesla also has reportedly cut production in China due to the rise of BYD and other Chinese automakers. The company's profit outlook remains dim as Tesla needs to enact price cuts in other markets including the United States.
