Tesla Eyeing Indian Factory With Capacity Of 500,000 EVs

Elon Musk has been trying to enter the Indian market for a couple of years but the 100% import duty was a huge hurdle.

The Indian factory of Tesla might soon become a reality which could have an annual capacity of 500,000 EVs. The recent EV policy of the government of India to reduce the import duties on premium cars from over 100% to 15% has created a buzz among interested parties. On top of this list was Elon Musk’s Tesla. It was in talks with the Indian government for the past couple of years, seeking a reduction in import tariffs.

However, the Indian government had unequivocally clarified that it is willing to do so only if the foreign carmaker is prepared to set up local manufacturing with a minimum investment of $500 million. With the new EV policy, the import taxes are just 15%. Hence, Tesla is sending out officials to India to look for the ideal location to set up a factory which could incur a cost between $2 billion and $3 billion.

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Tesla Plans Indian Factory With 500,000 Capacity

This won’t be the first time Tesla will be sending out officials to India. There were many reports last year suggesting that the American EV maker was already scouting for Tesla headquarters in Bangalore, Karnataka. Apart from that, the officials were present to have dialogues behind closed doors with the Indian government officials to hurry with this EV policy. Now that it is finally here, it is Tesla’s turn to keep its end of the promise.

The Indian automobile industry is the 4th largest in the world, behind only China, the USA and Japan. Hence, Tesla understands the importance of this burgeoning marketplace. This is especially crucial since the EV demand, in top developed countries like the USA and China, is dwindling. In fact, the industry is anticipating a slower growth this year. In such a scenario, expanding its footprint across diverse nations like India, the Middle East, South East Asia and parts of Europe seems logical.

Tesla’s $25,000 EV

A crucial part of Tesla’s future plans is the much-talked-about ~$25,000 EV. It is very much possible once manufacturing shifts to a country like India. In India, Tesla is closely evaluating regions like Gujarat, Maharashtra and Tamil Nadu to set up the production facility due to the already existing automobile infrastructure in these regions, the availability of OEM suppliers, and proximity to the ports in order to flood the neighbouring markets with Made-in-India EVs.

Once Tesla commences its operations here, many auto ancillaries will also be attracted. This would increase the foreign investment in India significantly. In return, the government of India will extend enticing subsidies and incentives to Tesla to sell their vehicles in the country. In that way, the local economy will get a boost with this investment, and Tesla will be able to manufacture its EVs are affordable prices to compete with tons of newcomers in various new markets in this part of the world. Hence, it will be a win-win for both stakeholders.

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Learn Electric Cars Says

Tesla, just like many other international companies with varied backgrounds, is ideally trying to shift operations from China to India. While that is a big deal, choosing India makes sense otherwise too. In order to expand its global footprint, having a base in one of the biggest automobile markets in the world is prudent. Even though the EV demand in China and the USA is slow, the Indian and its neighbouring markets are still at a nascent stage. There is a ginormous room for growth, at least for the next few years. Let us see how fast Tesla can capture the Indian market and commence production there.