Tesla may probably choose Gujarat for its plant in India

Last month, India reduced import taxes on certain electric vehicles made by carmakers. Tesla is dedicated to investing at least $500 million and beginning domestic manufacturing within three years.

In a bid to expand its global presence, Tesla is reportedly sending a team to India this month to scout locations for a proposed $2 billion to $3 billion electric car manufacturing plant, as reported by the Financial Times.

Market Expansion Amidst Challenges

Tesla’s move into India comes at a challenging time, with the electric vehicle (EV) demand slowing down and increased competition in its primary markets of the U.S. and China. The company faced a setback in the first quarter with a drop in deliveries, missing estimates.

Focus on Automotive Hubs

The scouting efforts will focus on states in India known for their established automotive hubs, including Maharashtra, Gujarat, and Tamil Nadu. These regions offer infrastructural support and skilled labor, making them attractive prospects for Tesla’s manufacturing plant.

India’s EV Incentives

India recently implemented incentives to encourage domestic EV production. By reducing import taxes on select electric vehicles, the government aims to attract investments from carmakers committing to invest at least $500 million and initiate local manufacturing within three years.

Elon Musk’s Pursuit

CEO Elon Musk has long expressed interest in entering the Indian market. However, India’s requirement for a commitment to local production posed a challenge. 

Musk met with Prime Minister Narendra Modi in June last year to discuss potential collaborations, and Tesla officials have been engaging with government representatives over the past year.

Previous Plans and Potential Impacts

In July last year, Tesla announced its intention to establish a factory in India to manufacture an EV priced at $24,000. Additionally, the company advocated for lower taxes on higher-priced models intended for the Indian market.

Tesla’s entry into India could have significant implications, stimulating additional investments in the EV sector and benefiting Indian-based auto parts manufacturers, according to analysts. 

This move underscores Tesla’s commitment to global expansion and its recognition of India’s potential as a key market for electric vehicles.