Tesla to setup plant in India in two years: Report

Tesla Inc. is nearing a deal with the Indian government that would enable the US carmaker to start importing its electric vehicles (EVs) to India from 2024, while also preparing for a local plant within two years, Bloomberg News reported. The announcement is expected to be made at the Vibrant Gujarat Global Summit in January, with Gujarat, Maharashtra, and Tamil Nadu being the likely candidates for the plant location, owing to their strong EV and export sectors, the report said.

Tesla would agree to invest at least $2 billion initially for the plant, and increase its auto parts purchases from India to up to $15 billion. The company also plans to produce some batteries in India to lower costs, according to Bloomberg sources.

These plans are not final and may change, as Tesla CEO Elon Musk said in June that the company wants to make a “significant investment” in India, and plans to visit in 2024.

Tesla is looking to expand its presence in India, a country with a growing demand for EVs. The company already has factories in the US, China, and Germany, and its possible entry in India follows the Indian government’s push, led by Prime Minister Narendra Modi, for more domestic production of EVs to promote cleaner transport. However, India’s EV market has seen limited growth, accounting for only 1.3 per cent of total passenger vehicle sales last year, as per BloombergNEF.

High costs of electric cars and lack of charging infrastructure are some of the challenges faced by the market. Tesla currently does not import cars to India due to high tariffs, but local production could reduce the prices, with some estimates suggesting that Tesla cars made in India could cost as low as $20,000.

Union Minister Piyush Goyal, who visited Tesla’s facility in Fremont, California, in September, revealed that Tesla aims to double its auto parts purchases from India to $1.9 billion this year.

The talks between India, the world’s third-largest car market, and Tesla resumed in May after a year-long stalemate. Tesla’s previous attempt to enter the Indian market failed due to India’s high import taxes and EV policies.