According to persons familiar with the Indian government’s thinking, India and Tesla Inc. are nearing an agreement that would permit the US manufacturer to transport its electric vehicles to the nation starting next year and establish a facility within two years.
An announcement might be made at the Vibrant Gujarat Global Summit in January, according to a source who asked not to be named since the talks are confidential. According to another source, the states of Tamil Nadu, Maharashtra, and Gujarat—home state of Prime Minister Narendra Modi—are being considered because they already have developed ecosystems for exporting and selling electric cars.
According to one source, Tesla plans to invest a minimum of $2 billion in its plants initially and aim to boost its national auto parts purchases to as much as $15 billion. According to the source, the US automaker would also look to reduce costs by producing certain batteries in India.
The people stated that no decisions have been made in stone and that plans may change. Elon Musk, the CEO of Tesla, stated in June that the company will be making a “significant investment” in India, and he intended to travel there in 2024.
Requests for comments were not answered by representatives of the ministries of finance, commerce, and industry, or the Ministry of Heavy Industries, which regulates the auto industry. Additionally, Tesla did not reply to a comment request.
Breaking into the most populous country in the world would be beneficial for Tesla, which presently has plants in the US, China, and Germany. In this country, aspiring middle-class consumers are driving an increasing number of electric automobiles. The Modi administration has been working to promote the quicker uptake of cleaner transportation and boost local EV production.
Despite these initiatives, India’s EV sector hasn’t taken off; according to BloombergNEF, only 1.3% of all passenger vehicles sold last year were battery-powered automobiles. Due to the high initial cost of electric automobiles and the scarcity of charging stations, buyers are unwilling to switch.
Tesla avoids importing vehicles into India directly due to the substantial levies imposed. Some of the people stated that when the first locally produced cars are put up for sale, their retail prices might be as low as $20,000.
During a visit to Tesla’s Fremont, California plant earlier this month, Trade Minister Piyush Goyal announced in September that Tesla intends to nearly quadruple its imports of auto parts from India to $1.9 billion this year. The electric vehicle manufacturer imported $1 billion worth of parts from the country the previous year, he said at a New Delhi event.
After a year-long standoff, Tesla and India, the third-largest auto market in the world, resumed talks in May. India has encouraged Tesla not to sell automobiles built in China, its political adversary, after Musk lambasted the country’s high import duties and electric vehicle (EV) rules.
According to recent reports, India may reduce import duties for foreign electric vehicle manufacturers for a five-year period in exchange for their future commitment to establish local manufacturing.
