Tesla plans to start by importing and selling its Model 3 electric sedan in India, according to sources.
New Delhi:
India is ready to offer incentives to ensure that Tesla Inc’s production cost is lower than in China if the automaker commits to making its electric vehicles in the country, Union Minister Nitin Gadkari told Reuters.
Gadkari’s proposal comes weeks after billionaire Elon Musk’s Tesla registered a company in India in a step towards entering the country, possibly in the middle of 2021. Sources familiar with the matter said Tesla plans to start by importing and selling its sedan. Electric Model 3 in India.
“Instead of assembling (the cars) in India, they should manufacture the entire product in the country, by hiring local suppliers. So, we can give higher concessions,” said Gadkari in an interview, without giving details about what incentives would be offered.
“The government will ensure that Tesla’s production cost is the lowest compared to the world, even China, when it starts making its cars in India. We will guarantee this, ”he said.
India wants to increase local manufacturing of electric vehicles (EVs), batteries and other components to cut expensive imports and reduce pollution in its main cities.
This comes amid a global race by automakers to boost the production of electric vehicles, while countries work to reduce carbon emissions.
But India faces a major challenge to obtain a production commitment from Tesla, which did not immediately respond to an e-mail requesting comments on its plans in the country.
India’s fledgling EV market accounted for just 5,000 out of a total of 2.4 million cars sold in the country last year as negligible charging infrastructure and the high cost of EVs deterred buyers.
In contrast, China, where Tesla already makes cars, sold 1.25 million new energy passenger vehicles, including EVs, in 2020 out of a total sales of 20 million, and accounted for more than a third of sales Tesla’s global
Nor does India have a comprehensive EV policy, like China, the largest automotive market in the world, which forces companies to invest in the sector.
Gadkari said that in addition to being a large market, India could be an export hub, especially with about 80 percent of the components for lithium-ion batteries being manufactured locally now.
“I think it’s a win-win situation for Tesla,” said Gadkari, adding that he also wanted to get involved with Tesla about building an ultra high-speed hyperloop between Delhi and Mumbai.
India is working on an incentive scheme linked to production for automakers and automotive components, as well as for the creation of advanced battery manufacturing units, but the details have not yet been finalized.
Moving to cleaner energy sources and reducing vehicular pollution are seen as essential if India is to fulfill its Paris Agreement climate commitments.
Last year, India introduced stricter emission rules for automakers, in line with international standards. Now, it is looking to tighten fuel efficiency rules from April 2022, which industry executives say may force some automakers to add electric or hybrid vehicles to their portfolios.
Affected by the COVID-19 pandemic, the industry says it needs more time to make the transition.
Gadkari said he was not directly responsible for making the decision to postpone, but he was confident that India would live up to its Paris treaty commitments without interrupting economic growth.
“Development and the environment will go hand in hand. We will take some time, but soon we will reach international standards, ”he said.