Photographer: Angel Garcia / Bloomberg
Photographer: Angel Garcia / Bloomberg
Tesla Inc. is closing a deal to manufacture electric vehicles in India for the first time, opening up a new growth opportunity after starting production in China.
Tesla chose Karnataka, a southern state whose capital is Bangalore, for its first plant, the state’s chief minister said over the weekend. The automaker has been negotiating with local authorities for six months and is actively considering car assembly in the suburbs of Bangalore, people familiar with the matter said.
Tesla did not immediately respond to requests for comment and did not confirm the minister’s statement.
The company is conducting due diligence for office properties in the region and plans to open an R&D unit, people said, asking not to be named because the matter is private. Tesla focused on Bangalore because it is shaping until be a center for electric vehicles and aerospace manufacturing talent, they said. Tesla incorporated its Indian unit and registered offices in central Bangalore.
CEO Elon Musk almost confirmed that Tesla would enter India in January, after months of speculation. The richest man in the world on January 13 tweeted “as promised” in response to a reported on a Tesla-focused blog that the automaker was in negotiations with several Indian states to open an office, showrooms, a research and development center – and possibly a factory.
This revelation generated euphoria in residents, like Nikhil Chaudhary, a 20-year-old student at the University of Delhi who helped start the Tesla fan club in 2019.
Despite the hype, Tesla’s foray into India may well be a challenge. The country has yet to launch the welcome mat for EVs like neighboring China, where Tesla set up its first factory outside the U.S. and now dominates sales of premium EVs.
EVs account for about 5% of annual car sales in China, according to BloombergNEF, compared to less than 1% in India.
According to the International Energy Agency, about 60% of the world public points of slow and fast loading are in China. While Chinese automakers are launching competitive EV models and developing a diverse ecosystem, the country is “moving to disrupt the current global automotive industry landscape,” analysts at UBS Group AG wrote in a report last month.
A Model 3 vehicle leaves 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 Hybrid and EV Adoption and Manufacturing (FAME) plan, with a commitment of 9 billion rupees ($ 123 million) in subsidies that cover everything from electric tricycles to buses, according to IEA. ONE the second generation of the FAME program introduced in 2019 was larger, with 100 billion rupees to encourage the purchase of EVs and build a charging infrastructure.
India also cut the VAT on goods and services tax from 12% to 5%, as of August 2019, much lower than the rates of up to 28% applied to other motor vehicles, which has drawn criticism from companies such as Toyota Motor Corp.
Read more: India has 150 million drivers and only 8,000 want electric cars
– With the help of Bruce Einhorn, Ragini Saxena and Vlad Savov