American electric automaker Tesla’s plans to penetrate the Indian automotive market are getting closer to materializing as it proposes billions of dollars in investment, Bloomberg reports, citing people familiar with the matter.
Report highlights
The report disclosed Tesla’s alleged proposal of an initial investment of approximately $2 billion for developing a new electric vehicle factory in India.
Moreover, the Musk-led company also apparently intends to boost its auto parts acquisition from Indian suppliers to $15 billion.
Tesla is also considering establishing a local battery production in the country to ensure lower costs.
However, ET noted that the Indian Government must first allow Tesla to import its EV models by next year. In return, the American automaker must be able to build a factory in the country within two years.
One of the report sources claims that an official announcement could come at the Vibrant Gujarat Global Summit in January 2024. Tesla apparently has a huge interest in Gujarat, Maharashtra, and Tamil Nadu due to their commendable EV ecosystem and export industry.
India’s new policy development
India intends to introduce a new policy to accelerate Tesla investment proposal approvals by next year, as EV-a2z previously reported. It will highly likely tackle Tesla’s demand to benefit from lower car imports to at least 40%.
However, it must be noted that the Indian Government aims to offer equal incentives for all-electric automakers in the country regardless of their origin.
“The government’s approach is for the industry as a whole and not for any specific company because we have very strong domestic companies in this sector.”
Indian Government Official
Status quo
Tesla and the Indian officials have yet to come up with a final decision. Therefore, the sources warned that current plans may still change.
In hindsight, Tesla Chief Elon Musk announced plans in June to make a “significant investment” in the country and to visit in the following year.
However, entering the Indian market remains challenging for the world’s most valuable automaker due to the high car import tariffs.
As of now, India imposes a 60% tax duty on electric vehicles costing below $40,000. Meanwhile, those models exceeding the price cap must pay 100% import tax.
Now, reports suggest that India is getting closer to winning over the American electric vehicle giant. Tesla’s imminent presence in India will undoubtedly shake up the local EV industry. Nonetheless, it will undoubtedly boost the country’s electrification strategies and targets.
