Tesla CEO Elon Musk has signaled that his electric vehicle company is preparing to enter the Indian market, both in terms of vehicle sales and potentially manufacturing. In a recent interview, Musk stated that like other major nations, India should have access to electric vehicles, implying it is a natural next step for Tesla to offer its products in the country.
Reports indicate Musk is planning a visit to India in the week of April 22nd. During this trip to New Delhi, he is expected to meet with Prime Minister Narendra Modi to discuss Tesla’s investment plans. Musk may make an announcement regarding Tesla’s India strategy while there.
Musk’s comments come as Tesla is scouting locations to establish a manufacturing base in India. The states of Maharashtra and Gujarat have reportedly offered land parcels to Tesla to set up an electric vehicle factory. Analysts estimate Tesla could invest between $2-3 billion in its Indian operations, with plans to cater to both domestic demand as well as export markets.
The timing aligns with India’s new policies incentivizing electric vehicle production within its borders. The federal government has rolled out subsidy schemes for companies manufacturing EVs in India, with requirements around minimum investment thresholds and domestically sourced components escalating over time.
Specifically, the policy mandates a minimum $500 million investment upfront. It also stipulates that by the third year of operations, at least 25% of components must be locally sourced, increasing to 50% localization by year five. As an added incentive for rapid localization, imported vehicles over $35,000 will face 15% customs duties for five years unless production facilities are established within three years.
For Tesla, which is banking on making India a major source of electric vehicle production and sales, adhering to these local manufacturing and sourcing requirements could be key to maintaining a competitive pricing structure. Musk’s visit suggests Tesla is seriously weighing its Indian investment and factory installation plans.
