Electric vehicle giant Tesla may officially announce its decision regarding a new production plant in India at the Vibrant Gujarat Summit in Gandhinagar in January 2024, which Chief Executive Elon Musk and Prime Minister Modi will attend, ANI reported on Thursday.
For context, the highly awaited event is a prominent global forum for key matters such as business networking, knowledge sharing, and growth and sustainable development strategic partnerships.
Report highlights
Gujarat government’s spokesperson and Health Minister Rushikesh Patel was reportedly confident that Tesla would pursue Gujarat for investment while addressing a Cabinet meeting yesterday, citing the government’s significant support for the American EV giant.
Minister Patel further disclosed that Tesla executives had been scouting for a potential factory in the country, emphasizing that the negotiations between them are actively underway.
“The company officials have visited Gujarat, and indications suggest a preference for the state as the location for their first factory in the country. Our team is in ongoing communication with Tesla officials, and we remain hopeful of an announcement in this regard soon.”
Rushikesh Patel, Gujarat Health Minister (via Teslarati)
According to an unnamed government official, Tesla may choose Sanand as it currently serves as Gujarat’s automotive hub. However, a recent report from Bloomberg News noted Tesla’s consideration for Maharashtra and Tamil Nadu.
Previous talks
Tesla’s plans to penetrate the Indian market with its electric vehicle models have long been impeded by the country’s high import tariffs that even reach 100% for models exceeding the $40,000 mark. Meanwhile, it drops to 70% for EVs below that price cap.
Therefore, the Musk-led company has been asking the government to drop the import tariff to at least 15% before it builds a local production through a $2 billion factory. As per ET, Tesla initially plans to import the popular Model 3 and Y in the country. It also aims to produce its planned mass-market hatchback EV in a potential Indian factory with a price point of about Rs 20 lakh.
However, previous reports revealed that the government currently has no proposal to lower tariffs for imported EVs, which significantly risks its negotiations with Tesla.
Why Gujarat?
Gujarat is apparently a strategic location for Tesla’s planned export-focused approach for the new Indian EV factory to supply domestic and foreign markets. According to Mint, Sanand’s proximity to Kandla-Mundra port in Gujarat can significantly boost Tesla’s EV exports from India.
In addition, Gujarat is among the Indian states with well-built electric vehicle and export industries due to its supportive policies. In fact, it houses major production facilities of established industry players like Maruti Suzuki, etc.
All that said, it would be exciting to see if India will give in to Tesla’s request for lower import tariffs for electric vehicles in exchange for the automaker’s $2 billion investment for local production with a two-year window to develop the factory. However, Gujarat government officials assured all other automakers that it would not offer Tesla a special treatment once it builds a factory in the country.
