Tesla Plans $2-3 Billion Investment for Electric Car Plant in India

Tesla, the renowned electric vehicle company, is set to send a team to India this month to scout locations for a proposed $2-3 billion electric car manufacturing plant. This move follows New Delhi’s recent reduction in tariffs on higher-priced imported EVs for companies committing to local production within three years.

Sources with direct knowledge of Tesla’s plans revealed that the company will dispatch a team from the US to study potential plant sites by late April, focusing on states with established automotive hubs such as Maharashtra, Gujarat, and Tamil Nadu. While Haryana state near New Delhi is also under consideration, emphasis is placed on states with ports for easier exportation.

Prime Minister Narendra Modi’s government sees Tesla’s potential investment as a significant boost, especially amid an upcoming general election where economic performance will be closely scrutinized. Modi had previously urged Elon Musk to invest in India during their meeting last year, where Musk expressed intentions to establish a presence “as soon as humanly possible.”

Tesla has indicated plans to manufacture a smaller, more affordable vehicle priced below $30,000 in the proposed Indian factory, targeting both domestic and international markets, including southeast Asia, the Gulf, Africa, and southern and eastern Europe. This expansion aligns with India’s efforts to promote manufacturing, particularly in critical sectors like electric vehicles, to compete with China’s dominance.

The proposed investment, estimated at $2-3 billion, could potentially become one of India’s largest inward foreign investments, with suppliers expected to inject additional billions. Tesla aims to achieve an annual production capacity of up to 500,000 cars at the plant’s full operation. Moreover, there are considerations for establishing a battery plant similar to Tesla’s “gigafactory” model seen in other locations worldwide.

This development comes amidst a global slowdown in EV sales, with Tesla diversifying its production locations, including an upcoming plant in Mexico. While India has been slower in EV adoption compared to China, other players like BYD and Vietnam’s VinFast are eyeing investments in the Indian market.

The Indian government, in a bid to accelerate EV adoption, plans to formally invite applications for an EV tariff reduction scheme by the end of this month, allowing eligible companies to import up to 8,000 vehicles annually.

Tesla’s potential entry into the Indian market signifies a significant milestone, potentially reshaping the country’s automotive landscape and advancing its EV ambitions on a global scale.