Tesla, the famous electric vehicle (EV) manufacturer, is getting ready to explore possible locations in India this month for establishing a state-of-the-art electric vehicle factory, which is an important step in supporting Prime Minister Narendra Modi’s vision to strengthen domestic manufacturing. A recent Financial Times report suggests that Tesla’s potential investment could be as much as $2 to $3 billion, which would be a significant step forward for India’s rapidly expanding electric vehicle market.
The Financial Times stated that Tesla is considering Maharashtra, Gujarat, and Tamilnadu—all of which are already home to thriving automotive hubs—as possible locations for its electric vehicle manufacturing facility. The report was based on information provided by two reputable sources who are aware of the situation. This calculated action connects with India’s recent announcement that import duties on some EVs will be lowered, encouraging automakers to invest at least $500 million and start producing EVs domestically within three years.
According to a government spokesperson, “the Government of India has approved a scheme to promote India as a manufacturing destination so that e-vehicles with the latest technology can be manufactured in the country.” This shows how committed the government is to supporting domestic production capabilities in the EV industry.
When Elon Musk, the CEO of Tesla, met with Prime Minister Modi in June to discuss investment opportunities in India’s developing electric vehicle market, the foundation for Tesla’s possible entry into the country was set.
The approval of a production-linked incentive scheme, with a substantial budget of 25,938 crore rupees ($3.1 billion) over a five-year period, for the automobile and auto components sector further demonstrated India’s proactive stance in promoting domestic manufacturing. The previously mentioned initiative highlights the government’s efforts to increase domestic production and reduce reliance on imports, thereby creating a favorable environment for international automotive players such as Tesla.
Due to its strong investment desire for international expansion and expertise in creating extensive EV production ecosystems, analysts have identified Tesla as a top contender in India’s EV market. Ashwin Amberkar, a Canalys analyst, stated, “Tesla is the most attractive electric vehicle maker for India due to its large appetite for investment in global expansion and its ability to develop the EV production ecosystems.”
China’s growing EV industry has been the main driver of increased competition in India’s expanding EV market. Particularly, BYD of China briefly surpassed Tesla to become the world’s leading electric vehicle manufacturer in the fourth quarter of 2023 by taking advantage of the latter’s rapidly increasing sales of battery-powered cars. But in the first quarter of 2024, Tesla picked up steam and exceeded BYD’s sales figures.
The increasing competition among top EV manufacturers is highlighted by China’s dominance in the global EV market, which accounts for almost 60% of EV sales globally. A wide range of companies, including BYD, Xpeng, and Xiaomi, are fiercely competing for market share, starting price wars, and releasing a plethora of new models in an effort to address the growing demand for electric vehicles.
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