Tesla Plans to Setup Factory in India Soon For Local Sales and Export

Tesla executives presented the new proposal to Indian government officials this week

Tesla may soon start producing and selling its electric cars in India and talks of the matter are already underway. If a new report is to be believed, the world’s biggest electric carmaker is likely to revive its ambitions of entering the Indian EV market with a local production facility for sales in India and abroad. This would help Tesla avoid the 100 percent import duty on its car to India, which has largely been the deterrent for the company to start its operations in India till now.

A Reuters report, citing a source with direct knowledge of the matter, mentions that Tesla Inc has already proposed setting up a factory in India to build its electric cars. For this, executives from Tesla met with Indian government officials from Prime Minister Modi’s office and other ministries on Wednesday. The talks were held around local sourcing of components and other related topics.

Details of the proposal still elude us though, pertaining to the size of the factory, its production capacity, and the associated investment. There is no hint at the possible locations for such a facility either. What we can infer from Tesla’s usual practice, is that the factory will be massive and the company will look for aggressive sales within India and the Indian subcontinent once it’s up.

Tesla’s latest attempt at establishing its presence in India comes after the Indian government did not heed its demands for lowering of import taxes for Tesla’s electric cars. With Prime Minister Narendra Modi heavily promoting the ‘Make in India’ program, Tesla could not carry out its plans to test the Indian market first, before producing its EVs locally in the country. The report indicates that no discussion of lowering the import taxes was held this time.

Producing locally may just be the only viable option left for Tesla to enter the Indian electric car market as a strong contender to the existing ones. Since most of its models are already at the higher end of the price spectrum, paying a 100 percent import duty on their purchase in India would have already made them out of reach for most of the buyers. A local production facility shall help it set up a viable sales channel for the Indian market without the import taxes, along with possible subsidies offered throughout the supply chain under India’s FAME II scheme.

The practice was recently administered by Apple, which opened two new stores in the country and promised a production chain for all its iPhones on sale within India. After Apple, Tesla may be the new bigwig that enters the Indian market through the same route.