Tesla in talks to enter India with whopping $30B investment

By Akash Pandey

Jan 13, 2024


Tesla' investment will contribute to fulfilling various objectives of India in the realm of local manufacturing

Elon Musk-led Tesla is in advanced talks to invest $30 billion in India's electric vehicle (EV) sector over the next five years, per Hindustan Times.This includes a $3 billion direct investment for a new small car production from an Indian plant, $10 billion from other partners in the manufacturing ecosystem, and a cumulative $15 billion in the battery industry ecosystem."If it works out, this will be the biggest foreign direct investment commitment in India," an insider said.

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Pricing of new car is yet to be determined

Initially, the Musk-led Tesla plans to introduce "a limited number of its standard brands" to compete in India's luxury car market.It would also invest in a factory in India to produce a new small car for the developing countries.The car's pricing structure is yet to be determined, but it is expected to cater to the needs of countries in Asia, Latin America, and Africa.The factory might partially serve the Indian EV market and focus substantially on exports.

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Coule be 'Suzuki' moment for India's EV market

As per the aforementioned source, close to Tesla and involved in discussions on the project, Tesla's entry into India could be the "Suzuki moment" for India's EV industry. They added it could also be the "Apple plus moment" for the country's manufacturing aspirations, emphasizing Tesla's potential impact on various industries.

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Tesla hasn't yet revealed manufacturing module or timeline

Tesla has not officially disclosed its detailed intentions for the Indian market.Moreover, a senior official from the Indian government's economic ministry refrained from directly addressing the EV maker's case.However, they stated, "India is contemplating offering incentives to all participants in the electric vehicle (EV) sector. No particular company-specific incentives will be granted in any sector."This suggests that the possibility of import duty concessions, as part of a broader policy framework, is still under consideration.

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Indian government's commitment to incentives and EV adoption

The Ministry of Road Transport and Highways previously launched the EV30@2030 campaign.Under this initiative, the authority aims for 30% of newly registered private cars, 40% of buses, 70% of commercial cars, and 80% of two-wheelers and three-wheelers to be electric by 2030.This indicates a strong commitment to promoting EV adoption in the country, and Tesla's potential entry might help the case.

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Tesla considering 4 hubs for potential manufacturing facility

Similar to other prominent American companies, Tesla's strategies for entering the Indian market are aligned with its broader diversification efforts, extending beyond its focus on China.In India, Tesla is reportedly exploring potential locations for its manufacturing plant, with Haryana, Tamil Nadu, Maharashtra, and Gujarat under consideration.Considering the emphasis on exportation in its ambitious plans, it is probable that, should Tesla decide to invest, it might choose a coastal state in the western or southern regions of India.

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Company aims to launch small car in 2 years

Tesla's manufacturing module relies on a high degree of local content.Notably, in its Berlin factory, the local content in EVs is higher than in German marque Mercedes, while in Shanghai, the localization is 95%.Based on its record of setting up a plant within two years in Germany and one year in China, Tesla might roll out its first small car in India in two years and build the entire factory within three years.