- Tesla is edging closer to its much-anticipated entry into the Indian market, with plans for an electric car plant reportedly taking shape.
Tesla is ramping up its efforts to enter the Indian market with plans to send a team from the United States to scout locations for a proposed $2 billion to $3 billion electric car plant by late-April, according to a report by Financial Times citing sources.
India has the potential to emerge as a key market for Tesla at a time when its sales in major markets of the US and China are slowing down while competition with rival brands is intensifying. The company recently reported a drop in its first-quarter deliveries, missing estimates. And while the Indian electric car market still be much smaller when compared to several others, the potential in the world’s third largest vehicle market (overall) is believed to be enormous.
It is reported that Tesla is eyeing Indian states with established automotive hubs such as Maharashtra, Gujarat, and Tamil Nadu. This strategic focus aligns with India’s recent decision to lower import taxes on certain electric vehicles (EVs) produced by automakers committing to investing at least $500 million and starting domestic manufacturing within three years, a move that is expected to bolster Tesla’s plans for the Indian market.
India has been a challenging market for Tesla to penetrate as New Delhi has been adamant about requiring a commitment to local manufacturing. The country’s EV market, while still relatively small, is growing and currently dominated by domestic automaker Tata Motors. EVs accounted for about 2 per cent of total car sales in India in 2023, with the government aiming for 30 per cent by 2030.
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Tesla’s entry into India could potentially stimulate more investments in the EV sector and benefit local auto parts manufacturers, analysts believe. The company has been engaging with government officials for over a year, with CEO Elon Musk meeting Prime Minister Narendra Modi in June last year.
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In July 2021, Tesla expressed its interest in building a factory in India to produce an EV priced at $24,000. Additionally, the company called for lower taxes on its more expensive models that it intends to sell in India, according to previous reports by Reuters.
The reportedly upcoming visit by Tesla’s team to explore potential factory locations may clearly signal the company’s commitment to establishing a foothold in India’s burgeoning EV market. If successful, Tesla’s entry could not only boost EV adoption in the country but also pave the way for a new wave of investments and technological advancements in the Indian automotive sector.
First Published Date: 03 Apr 2024, 22:25 PM IST