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Tesla Team To Explore Site For $3-Billion Electric Car Plant In India By This Month: Report


Elon Musk-led Tesla is poised to expand its global footprint with plans to set up a $2 billion-$3 billion electric car manufacturing unit in India. A team from the US is set to embark on a scouting mission in the country later this month to set up the first Tesla India plant, as reported by UK’s Financial Times on Wednesday.

India’s recent reduction in import taxes on select EVs, contingent upon substantial investment commitments from manufacturers, has further incentivised Tesla’s interest in the region. With an investment requirement of at least Rs 4,150 crore and a stipulated timeframe of three years for commencing commercial production, Tesla eyes India’s burgeoning electric vehicle market as a promising frontier.

The scouting team, hailing from the US, will survey potential locations for the plant, with particular emphasis on states boasting automotive industry clusters such as Maharashtra, Gujarat, and Tamil Nadu, according to insider sources cited in the report. Notably, Tesla’s preference for states with port access underscores its strategic intent to facilitate streamlined export operations.

While Haryana hosts automotive facilities of several other manufacturers, Tesla’s focus gravitates towards states with port infrastructure for enhanced export capabilities, the report elaborated.

Tesla’s prospective foray into India coincides with a challenging landscape in its primary markets of the US and China, where intensifying competition and subdued electric vehicle demand have impacted the company’s first-quarter deliveries, falling short of projections.

The potential establishment of a Tesla plant in India aligns with the company’s precedent of integrating battery production facilities, akin to its “gigafactory” model observed in California, Texas, Berlin, and Shanghai. Such a move, as highlighted by the Financial Times, may catalyse ancillary investment opportunities from suppliers co-locating near the manufacturing hub.

Elon Musk’s persistent endeavours to penetrate the Indian market have encountered regulatory prerequisites, with the Centre mandating commitments to local manufacturing. Tesla has engaged in dialogue with government officials over the past year, with Musk himself meeting Prime Minister Narendra Modi in June.

The envisioned Tesla investment holds significant political and economic implications, offering a substantial boost to the Modi government ahead of the Lok Sabha elections. Tesla had previously expressed interest in producing an electric vehicle priced at $24,000 in India, along with advocating for reduced taxes on higher-end models, according to previous reports by Reuters.

Industry analysts anticipate Tesla’s potential entry into the Indian market to stimulate further investments in electric vehicles, potentially benefiting domestic auto parts manufacturers. India’s electric vehicle policy mandates localisation targets of 25 percent within three years and 50 percent within five years of market entry to qualify for reduced customs duties, targeting vehicles priced at a minimum of $35,000.

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