Tesla is set to make significant strides in the Indian market with plans to establish a manufacturing plant in the country.
According to reports from the Financial Times (FT), Tesla intends to send a team to India this month to scout locations for a proposed $2 billion to $3 billion (about Rs 16,700 crore-Rs 25,000 crore) electric car plant. This move marks a significant development in Tesla’s efforts to expand its global footprint and tap into emerging markets.
The decision to explore manufacturing in India comes on the heels of recent policy changes by the Indian government aimed at promoting domestic EV production, where India reduced import taxes on certain electric vehicles produced by carmakers committing to invest at least $500 million and commence local manufacturing within three years. This policy shift has seemingly incentivised Tesla to seriously consider establishing a production facility in India, media reports noted.
Tesla’s reported foray into India occurs amidst a backdrop of challenges in its primary markets of the United States and China. With EV demand showing signs of slowing down and competition intensifying, Tesla recently reported a drop in first-quarter deliveries, falling short of estimates. Amidst these challenges, the company appears to be strategically diversifying its manufacturing footprint to mitigate risks associated with over-reliance on any single market, FT noted.
The prospective plant’s location is being carefully considered, with a focus on states boasting established automotive hubs such as Maharashtra, Gujarat, and Tamil Nadu, the report said. This strategic approach underscores Tesla’s intent to leverage existing infrastructure and resources to streamline operations and facilitate efficient production processes, as per FT.
Elon Musk’s ambition to penetrate the Indian market is not new. The Tesla CEO has been actively pursuing this goal for years, albeit facing hurdles from the Indian government, which has sought commitments to local manufacturing. Musk’s engagement with Indian authorities, including a meeting with Prime Minister Narendra Modi in June, underscores the seriousness of Tesla’s intentions to establish a presence in the country.
Tesla’s plans for India extend beyond mere manufacturing. The company expressed interest in producing an EV priced at $24,000 for the Indian market and advocated for lower taxes on its higher-end models, according to a Reuters report. These initiatives reflect Tesla’s broader strategy to cater to diverse consumer segments while navigating regulatory landscapes in emerging markets, FT reported.
The potential entry of Tesla into the Indian market holds significant implications not only for the EV sector but also for the broader automotive industry. Analysts anticipate that Tesla’s presence could catalyse further investments in EV infrastructure and technology, potentially benefiting domestic auto parts manufacturers, FT noted.