When EV demand is slowing in its main markets of the U.S. and China, Tesla is reportedly pushing towards India now.
Electric vehicle giant Tesla is reportedly all set to send its team from the United Stated by late April in order to scout locations in India for a potential $2 billion to $3 billion electric car plant, as reported by the Financial Times. The development comes amid India’s plan to reduce tariffs on higher-priced imported electric vehicles (EVs) while committing to domestic production within three years. As per the report, Tesla will look at major automotive hubs such as Maharashtra, Gujarat, and Tamil Nadu for the plant, while New Delhi, could also be considered. However, the focus remains on the states with port facilities.
Amid all this, it cannot go unnoticed that the Indian government, since last year, was expediting the approval process for welcoming Elon Musk's electric vehicle (EV) company Tesla to India. In a meeting last year, convened by the Prime Minister's Office, the future of EV manufacturing in India was discussed, and Tesla's investment proposal in India remained a key takeaway, which led officials to prioritise the acceleration of approvals for Tesla's investment.
After Prime Minister Narendra Modi met Tesla CEO Elon Musk during his state visit to the US in June last year, the Indian ministries of commerce and industry, heavy industry, and electronics and IT made sure to expedite the process. Post that US President Joe Biden was invited by India as the chief guest for the Republic Day celebrations on January 26, 2024. Clearly, Biden’s visit was a talking point about Tesla’s investment, aiding the idea of Make in India and Aatmanirbhar Bharat.
“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 said after his meeting with PM Modi.
Earlier too, Tesla and the Indian government had discussed the establishment of a car and battery manufacturing facilities in India, and Tesla was always keen to bring the supply chain ecosystem to India. Indian ministries have been trying to resolve any differences with Tesla ahead of its official announcement of the company's manufacturing plant in India.
For those caught unaware, Tesla had previously backed out of its plans for India due to disagreements over import duty reductions. But the Indian government was looking at local manufacturing in exchange for import duty concessions.
Nonetheless, the expansion of Tesla’s global factory network comes amid the times when the global EV sales have slowed down. Tesla is also building a plant in Mexico, which is expected to come online in 2026. Albeit, with Tesla’s $2bn-$3bn investment in the Indian car plant, the suppliers would invest billions of dollars more, which would make Tesla’s car plant as one of India’s biggest inward foreign investments.
Meanwhile, it is reported that Tesla might also look at setting up its own battery plant in India as well, following the “gigafactory” model, similar to its plants in California, Texas, Berlin, and Shanghai. At a time when, India is slow in adapting to the EVs and charging infrastructure, the official announcement is still awaited.
