Billionaire Elon Musk-led Tesla is set to explore potential locations in India this month for its proposed $2 billion to $3 billion electric car manufacturing plant, as reported by UK’s Financial Times.
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Incentives for Investment in India
India recently reduced import taxes on certain electric vehicles for carmakers committing investments of at least Rs. 4,150 crore within a three-year timeframe for commencing commercial production.
Scouting Mission of Tesla
A team from Tesla’s United States headquarters is scheduled to arrive by late April to assess suitable sites for the plant, with a keen focus on states housing automotive hubs like Maharashtra, Gujarat, and Tamil Nadu.
Strategic Location Choices for Tesla’s Gigafactory
Tesla’s preference for states with ports, such as Maharashtra, Gujarat, and Tamil Nadu, over Haryana, underscores the ease of exporting cars from these locations, according to sources cited in the report.
Evolving EV Market Dynamics of Tesla Cars
Tesla’s potential entry into India coincides with a slowdown in EV demand globally and intensifying competition in its primary markets of the US and China, leading to a dip in first-quarter deliveries.
Long-term Vision: Gigafactory Model of Tesla
The company may also contemplate establishing a battery plant akin to its “gigafactory” model adopted in California, Texas, Berlin, and Shanghai, where suppliers are situated in proximity to the main manufacturing facility.
Tesla’s determination to enter India
Tesla CEO Elon Musk’s efforts to penetrate the Indian market have spanned several years, with discussions with government officials culminating in a meeting with Prime Minister Narendra Modi in June last year.
Political Significance
A confirmed investment by Tesla would offer a substantial boost to Prime Minister Narendra Modi’s government, particularly in the lead-up to the 2024 Lok Sabha elections.
Local Manufacturing of Tesla Cars in India
Tesla’s interest in establishing local manufacturing facilities aligns with New Delhi’s requirement for a commitment to domestic production for market entry.
Promoting EV Adoption in India
Tesla’s proposed investment may stimulate further EV investments in India, benefiting domestic auto parts manufacturers, while also advancing the country’s localization goals outlined in its EV policy.
Writer’s Remark
The localization requirements outlined in India’s EV policy aim to facilitate access to global technologies, broaden product offerings, and enhance cost competitiveness, ultimately fostering increased EV adoption nationwide.
