India (Commonwealth Union)_ India is reportedly in the final stages of negotiating a deal with Tesla Inc., enabling the US electric vehicle (EV) manufacturer to import its cars to the country starting next year and potentially establish a manufacturing plant within two years, according to sources familiar with the matter. For Tesla, penetrating India, the world’s most populous nation with a growing demand for electric vehicles among the aspirational middle class, presents a significant opportunity. Despite efforts by the Modi government to boost domestic EV manufacturing and accelerate the adoption of cleaner transport, India’s EV market has not seen widespread adoption, constituting only 1.3% of total passenger vehicle sales last year.
As part of the agreement, Tesla is expected to make an initial minimum investment of approximately $2 billion in the plant, with plans to increase auto parts purchases from India to as much as $15 billion. The US automaker may also explore the production of batteries in India to reduce costs. Tesla CEO Elon Musk had previously expressed the company’s intent to make a “significant investment” in India during June, indicating a visit to the country in 2024. While representatives from India’s Ministry of Heavy Industries, responsible for overseeing the automobile sector, as well as the ministries of finance and commerce industry, have not commented on the matter, Tesla has also refrained from offering an official statement.
Tesla, which currently operates factories in the US, China, and Germany, does not directly import cars into India due to high tariffs. If Tesla’s locally manufactured cars go on sale, they could potentially be priced as low as $20,000, according to sources. While no official announcement has been made, sources suggest that the deal could be unveiled at the Vibrant Gujarat Global Summit scheduled for January. Potential locations for the factory include Gujarat, Maharashtra, and Tamil Nadu, as they already possess well-established ecosystems for electric vehicles and exports.
Trade Minister Piyush Goyal, who paid a visit to Tesla’s plant in Fremont, California, earlier this month, announced in September that Tesla is planning to nearly double its purchases of auto parts from India to $1.9 billion this year. India, being the world’s third-largest automobile market, restarted discussions with Tesla in May after a year-long impasse. The negotiations have involved concerns from both sides, with Musk criticizing India’s high import taxes and EV policies, while India has advised Tesla not to sell cars made in China, a political rival. India is now reportedly contemplating reducing import taxes for international EV manufacturers for a five-year period, provided they commit to establishing local manufacturing facilities.
