Photographer: Angel Garcia / Bloomberg
Photographer: Angel Garcia / Bloomberg
Tesla Inc. concludes an agreement to make electric vehicles for the first time in India, and concludes a new growth opportunity after production in China.
Tesla has selected Karnataka, a southern state with the capital Bangalore, for its first plant, the state minister said at the weekend. People familiar with the matter have been negotiating with local officials for six months and are actively considering assembling cars on the outskirts of Bangalore.
Tesla did not immediately respond to requests for comment and did not confirm the minister’s statement.
The people are conducting careful investigations into office real estate in the region and planning to set up an R&D facility, the people said, asking not to be named because the case is private. Tesla has focused on Bangalore as it takes shape to be a hub for electric vehicles and aerospace manufacturing talent, they said. Tesla has taken up its Indian unit and registered offices in downtown Bangalore.
CEO Elon Musk has confirmed that Tesla will enter India after months of speculation. The richest man in the world on January 13 tweeted “as promised” in response to a reported on a Tesla-directed blog that the carmaker was in talks with several Indian states to open an office, showrooms, a research and development center – and possibly a factory.
The revelation sparked euphoria from locals, such as Nikhil Chaudhary, a 20-year-old student at the University of Delhi who helped start India Tesla fan club in 2019.
Despite the hype, Tesla’s intrusion into India could potentially be a challenge. The country has not yet rolled out the welcome mat for EVs like neighboring China, where Tesla set up its first factory outside the US and now dominates sales of premium EVs.
According to BloombergNEF, EVs are about 5% of China’s annual car sales compared to less than 1% in India.
According to the International Energy Agency, about 60% of the world public places for slow and fast loading are in China. As Chinese carmakers develop competitive EV models and develop a diverse ecosystem, the country is disrupting the current global automotive industry, UBS Group AG analysts wrote in a report last month.
A Model 3 vehicle moves from an assembly line during a ceremony at Tesla’s Gigafactory in Shanghai, in December 2019.
Photographer: Qilai Shen / Bloomberg
India has made similar moves but not yet on the same scale.
In 2015, it launched a faster plan for the adoption and production of hybrid and EV (FAME), with a commitment of 9 billion rupees ($ 123 million) to subsidies that, according to the IEA, cover everything from electric tricycles to buses. A the second generation of the FAME program launched in 2019 was larger, with 100 billion rupees to encourage EV purchases and expand charging infrastructure.
India also reduced the tax on goods and services to 5% from 12%, effective in August 2019, much lower than the levies of as much as 28% slapped on other motor vehicles, which were provoked under criticism by companies such as Toyota Motor Corp.
Read more: India has 150 million drivers and only 8,000 electric cars
– With help from Bruce Einhorn, Ragini Saxena and Vlad Savov