Home » Business » Auto » Govt Proposes ‘Make in India’ to Tesla For Domestic Production; Elon Musk unimpressed
Last updated: July 18, 2016 at 12:13 pm

Govt Proposes ‘Make in India’ to Tesla For Domestic Production; Elon Musk unimpressed

Tesla’s Latest Model 3 is Coming to India; Elon Musk Makes Announcement On Twitter

We were all elated when Tesla announced its plans to enter the Indian market in 2018 with the cheapest model, Tesla Model 3. Although the market in India is not ready yet, the Government is taking measures to ensure electric vehicles receive more benefits and subsidies.

According to a report by Indian Express, the Government of India has summoned the American automotive company to set up manufacturing units in the country and serve as the production hub for the Asian markets. Tesla has been keen on entering the Asian markets for very long, and with the Model 3 it proposes to make a dash into the electric automobile scene.

Prime Minister Narendra Modi, visited Tesla’s headquarters last year to invite the company to India. Fast forward 10 months, Nitin Gadkari, Transport Minister, has made a visit to the headquarters in California, IE reports. Gadkari has offered Tesla land around major ports and proposed joint ventures with local automobile manufacturers to promote electric vehicles.

In a statement, Ministry of Road Transport and Highways said, “He proposed to the Tesla senior executives to make India their Asia manufacturing hub and offered land near major Indian ports to facilitate export of their vehicles to South and Southeast Asian countries.”

Tesla has officially chosen China for production

Tesla has been looking for a manufacturing hub outside the US so as to cut down on costs and shipping to Asian and a few European countries. China emerged as the frontrunner in this race as Elon Musk, CEO – Tesla, chose the country for its manufacturing business.

Musk’s reasons were quite simple – China’s manufacturing costs are very very low, lower than India right now, and the savings on shipping costs will be high. The import fees will also be low, thereby reducing the overall final price of the car. The Chinese market itself is huge, as the sales are about 20 Million cars a year, and major players are now entering the market with their own electric cars.

The Chinese facility will be set up soon to churn out cars for the South-East Asian markets specifically, while also exporting cars to other major countries elsewhere.

Is it game over for India?

Even though Nitin Gadkari did plan to strike the right chord with Musk, the plan did not work out unfortunately. Elon Musk did not straightaway reject the proposal, but has averted it indefinitely.

The folks at Tesla are not just looking for manufacturing incentives, but also post-production utility of cars in India. Tesla’s massive infrastructure of electric cars and charging stations needs time and money to cope up with, something we feel India isn’t ready for yet.

The CEO, however, has shown interest in India and there could be possible joint ventures in the future. Indian automobile scene still revolves around less than the 10L segment, while Tesla’s cars would cost about 40-45L if completely imported, or around 25L if assembled in India.

Indian market isn’t mature enough to accept electric cars yet, and a very good example is the Mahindra E2O, which has poor sales despite Government’s subsidies. You cannot blame the people here either, everyone’s dream is a 5-seater sedan, family size.

Source: IE

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