According to sources, Tesla plans to import and sell its Model 3 electric sedan in India.
New Delhi:
India is ready to offer incentives to ensure that Tesla Inc’s production costs are less than in China if the carmaker is committed to making its electric vehicles in the country, Union Minister Nitin Gadkari told Reuters.
Gadkari’s pitch comes weeks after billionaire Elon Musk Tesla registered a company in India in a move towards the country, possibly as early as mid-2021. Sources familiar with the matter, Tesla said plans to start importing and selling its Model 3 electric sedan in India.
“Instead of assembling (the cars) in India, they should manufacture the entire product in the country by employing local entrepreneurs. Then we can give higher concessions,” Gadkari said in an interview without giving details. to give about what incentives are offered.
“The government will ensure that production costs for Tesla will be the lowest when compared to the world, even China, when they start manufacturing their cars in India. We will ensure that,” he said.
India wants to increase local production of electric vehicles, batteries and other components to reduce expensive imports and reduce pollution in its major cities.
It comes amid a global race by carmakers to kick-start EV production while countries work to reduce carbon emissions.
But India faces a major challenge in obtaining a production commitment from Tesla, which did not immediately respond to an email commenting on its plans in the country.
India’s new EV market last year accounted for only 5,000 of the total 2.4 million cars sold in the country as an insignificant charging infrastructure and the high cost of EVs deterred buyers.
In contrast, China, where Tesla already manufactures cars, sold 1.25 million new energy passenger vehicles, including EVs, out of total sales of 20 million in 2020, accounting for more than a third of Tesla’s global sales.
India also does not have a comprehensive EV policy like China, the world’s largest auto market, which obliges companies to invest in the sector.
Gadkari said India could not only be a big market but also an export hub, especially with about 80 per cent of the components for lithium-ion batteries now being manufactured locally.
“I think this is a win-win situation for Tesla,” Gadkari said, adding that he also wanted to liaise with Tesla about building an ultra-fast hyperloop between Delhi and Mumbai.
India is drawing up a production-linked incentive scheme for automotive and automotive component manufacturers, as well as setting up advanced battery manufacturing units, but the details have yet to be finalized.
The switch to cleaner energy sources and the reduction of vehicle pollution are considered essential for India to meet its Paris Agreement climate commitments.
India last year introduced stricter emission rules for carmakers to bring it up to international standards. The tightening of the fuel efficiency rules from April 2022 is now being considered, which, according to management members, could force some car manufacturers to add electric or hybrid vehicles to their portfolios.
The COVID-19 pandemic has been battered, saying the industry needs longer to make the transition.
Gadkari has said that he is not directly responsible for deciding whether to postpone, but is confident that India will meet its Paris treaty obligations without disrupting economic growth.
“Development and environment go hand in hand. We will take some time, but we will soon reach international standards,” he said.