Made-in-India Tesla inches closer: Agreement with Musk’s co in works
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.
One of the people, who asked not to be named because the talks are private, stated that an announcement might be made at the Vibrant Gujarat Global Summit in January. Tamil Nadu, Maharashtra, and Gujarat—the home state of Prime Minister Narendra Modi—are being considered because they have established ecosystems for exporting and electric vehicles.
According to one person, Tesla would look to increase its purchases of auto parts from the country to as much as USD 15 billion, and the US automaker would also look to make some batteries in India in order to reduce costs. Tesla would also commit an initial minimum investment of roughly USD 2 billion in any plant.
Elon Musk, the CEO of Tesla, stated in June that Tesla planned to make a “significant investment” in India, and he wants to visit in 2024. However, he stated that no final decision has been taken and the plans could alter, the sources added.
In addition to Tesla, representatives from the ministries of finance, commerce, and industry, as well as India’s Ministry of Heavy Industries, which regulates the auto industry, did not reply to requests for comment.
Tesla, which presently has factories in the US, China, and Germany, would greatly benefit from breaking into the most populous country in the world, where demand for electric vehicles is rising among aspirational middle-class consumers. Modi’s government has been pushing to increase domestic manufacturing of EVs and encourage a more rapid adoption of cleaner transport.
Despite these initiatives, the electric vehicle (EV) market in India has not taken off, with battery-powered cars making up just 1.3% of all passenger vehicles sold last year, according to BloombergNEF. The high initial cost of electric cars and the scarcity of charging stations have discouraged buyers from making the transition.
Trade Minister Piyush Goyal, who visited Tesla’s Fremont, California, plant earlier this month, stated in September at an event in New Delhi that Tesla plans to nearly double its purchases of auto parts from India to USD 1.9 billion this year. Last year, the electric carmaker sourced parts worth USD 1 billion from the country.
After a year-long standoff, Tesla and India, the third-largest auto market in the world, resumed talks in May. Musk has criticized India’s high import taxes and its EV policies, and India has advised Tesla not to sell cars made in China, its political rival.
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.