American electric vehicle giant Tesla is preparing to deploy its team to India to scout potential sites for a proposed local electric vehicle factory. The investment will cost a whopping $2 billion to $3 billion, Financial Times reports, citing “two people with direct knowledge” of the matter.
Tesla’s plans
According to the unnamed sources, Tesla plans to send a team from the United States to India by late April.
The assigned team will explore potential sites for the proposed $2B-$3B electric car factory.
Tesla’s team will reportedly focus on states that already house automotive hubs, such as Maharashtra and Gujarat in the west and Tamil Nadu in the south. Moreover, some car companies also operate factories in Haryana state, neighboring New Delhi.
One of the sources further revealed that the Musk-led company might also consider prospective locations around the capital. However, the other person claims that Tesla would focus on the other three states mentioned above as they have ports, which will substantially aid the company in exporting its electric cars.
The American electric vehicle giant has told government officials about its plans to locally produce a smaller electric car that would cost less than $30,000. The company could market the new lower-cost EV in the domestic market and also export it to other regions, including Southeast Asia, the Gulf, Africa, and southern and eastern Europe.
The people claim that Tesla expects the proposed factory to hit an annual production output of 500,000 EVs at full capacity. The company may also consider building its own battery factory to support its EV production in India.
India announces new policy
Tesla’s decision to pursue its long-standing plans for the Indian market comes after New Delhi finally announced a new electric vehicle policy, paving the way for lower import tariffs for foreign electric automakers.
However, it requires companies to first commit to investing in local manufacturing within three years.
This tariff cut was a huge factor in driving Tesla to consider developing a new gigafactory in India, considering that it was the top concession the company had been demanding from the government.
According to one of the sources, suppliers would support Tesla’s proposed factory with additional billions of dollars in investment. This considered, the factory will advance as one of the country’s largest foreign investments.
Boost for Modi
Tesla’s potential $2B-$3B investment in India’s electric vehicle industry will not only boost the local economy but also the competence of Prime Minister Narendra Modi’s government ahead of a looming general election this month.
In hindsight, Prime Minister Modi urged Tesla Chief Elon Musk to invest in local manufacturing when he visited the US in 2023. At the time, the Tesla boss assured that the company would “be in India . . . as soon as humanly possible”.
It is also worth noting that Prime Minister Modi has introduced billion-dollar subsidies to encourage local manufacturing, particularly in key industries like electric vehicles.
An unnamed Indian official disclosed the government’s plans to formally accept applications for the EV tariff reduction scheme by the end of April. Under this scheme, eligible car companies can import a maximum of 8,000 electric vehicles per year.
Tesla has yet to confirm the news. It would be exciting to see the Musk-led company finally entering the Indian market after multiple failed attempts. Its investment can substantially boost the local industry and local auto parts companies.
