Leading American automaker Tesla reached advanced talks with the Indian government about a potential market entry and local manufacturing.
The electric vehicle giant is also reportedly planning to locally produce new cars for developing countries.
Potential investment
Tesla’s direct and indirect investments in the country’s electric vehicle industry may total almost $30 billion in the next five years, HT reports, citing people closely involved in the official business plans.
This significant investment will reportedly include a new EV production factory, battery ecosystem, and ancillary industries.
According to the unnamed sources, $3 billion may go to a new Indian factory development that will manage the production of a new compact car model aimed at developing nations. Other partners will reportedly provide $10 billion in funding to support this new production venture.
Another $15 billion will fund Tesla’s planned battery industry ecosystem establishment over the next five years.
“If it works out, this will the biggest foreign direct investment commitment in India. Tesla will invest $3 billion in the plant and other partners in its manufacturing ecosystem will invest another $10 billion. In parallel, there will be another $5 billion investment in batteries that will grow to $15 billion. We are looking at a total of $30 billion.”
One of the report sources
India’s new EV policy
India is currently working on a new electric vehicle policy to accelerate its shift to e-mobility further, as reported by Trends News Line.
If the Indian government manages to satisfy Tesla’s demand for lower import duties on foreign-made models, the proposed investments will highly likely materialize.
For context, India requires Tesla to first commit to local manufacturing before potentially granting its request for lower import taxes.
It must also be noted that the new policy will benefit not only Tesla but also all other players aiming to invest in India.
“India will consider providing incentive to all players in the EV sector. No company specific incentive will be given in any sector.”
A senior government official working in the economic ministry
Tesla’s plans
Tesla aims to initially import some of its electric vehicles into the country to test customer demand in the luxury segment. It also plans to start establishing its charging network to support its expansion.
In addition, Tesla may build a local EV factory to launch the brand’s first small car within two years after completing construction of the entire factory within three years of entry.
Tesla has yet to announce more details about the model, including specifications and pricing. However, it will likely sell at a more affordable price to appeal to customers in the Asian, African, and Latin American markets, apart from India.
Tesla is reportedly considering Haryana, Tamil Nadu, Maharashtra, and Gujarat for its new Indian factory. Considering its export plans, it may pursue a coastal state in the west or south.
Tesla’s potential investment in India will significantly aid the government’s efforts to electrify 30% of newly registered private cars, 40% of buses, 70% of commercial cars, and 80% of 2- and 3-wheelers by 2030. It will also help the country in accessing new global supply chains and solidify the India-US partnership.
