Tesla is in talks with the Indian government to set up a factory with an annual capacity to produce about half a million electric vehicles.
The starting price for the vehicles will be 2 million rupees ($24,400.66)- more than double the price of India’s cheapest EV, MG Comet, and half a million costlier than Tata Nexon EV, the top-selling electric car here.
Moving away from China
India is soon becoming the manufacturing hub of choice for global companies looking to diversify their production bases beyond China.
If Tesla arrives in India, it will be a big boost for the government’s ‘Make in India’ pitch which has led to the likes of Apple’s vendors significantly investing in domestic production and using the country as a base for exports.
India also has a huge auto market to offer.
It is now the world’s fourth-largest after closing last year with sales of around 3.9 million units, behind only China, US and Japan.
Previous attempts at entering India
Last year, Tesla attempted to set up shop in India but it didn’t work out due to the government’s refusal to lower import taxes on its cars.
It presently levies as much as 100% import tax on electric vehicles.
India wanted Tesla to build locally, but the company said it wanted to export its cars to the country first so that it could gauge demand.
In yet another effort to enter the market, Tesla held discussions in May about incentives being offered by the government for its cars and battery manufacturing.
Latest development
The ongoing talks come weeks after CEO Elon Musk’s meeting with PM Modi during the latter’s high-profile visit to the US last month.
He said that he was a ‘fan of Mr Modi’ and added that the PM had been pushing him to invest in India.
“He (Mr Modi) really cares about India because he’s pushing us to make significant investments in India, which is something we intend to do. We are just trying to figure out the right timing … I am confident that Tesla will be in India and will do so as soon as humanly possible,” Musk had said on June 21.
India as an export base
The company also wants to use India as an export base to ship cars to countries in the Indo-Pacific region.
This time the commerce and industry ministry is leading the talks with the intention of putting together a “good deal”.
It will still maintain a level-playing field as talks now involve both local manufacturing and exports.
“Tesla has come to us with an ambitious plan, and we are confident that the movement will be positive this time around, especially as it involves both local manufacturing and exports,” a source said.
