Tesla plans to start importing and selling its Model 3 electric sedan in India, according to sources.
New Delhi:
India is ready to provide incentives to ensure Tesla Inc’s manufacturing costs would be lower than in China if the automaker commits to make its electric vehicles in the country, Union Minister Nitin Gadkari told Reuters.
Gadkari’s pitch comes weeks after billionaire Elon Musk’s Tesla registered a company in India in a move towards entering the country, possibly as early as mid-2021. Sources familiar with the case have said Tesla plans to start importing and selling its Model 3 electric sedan in India.
“Instead of assembling (the cars) in India, they should make the whole product in the country by hiring local sellers. Then we can make higher concessions,” Gadkari said in an interview, without giving details of which ones. incentives would be offered.
“The government will ensure that Tesla’s manufacturing costs are the lowest compared to the world, even in China, when they start manufacturing their cars in India. We will ensure that,” he said.
India wants to boost local production of electric vehicles (EVs), batteries and other components to reduce expensive imports and reduce pollution in its major cities.
This comes amid a global race of automakers to jump-start electric car production as countries work to reduce CO2 emissions.
But India faces a major challenge in securing a production commitment from Tesla, which did not immediately respond to an email requesting comment on its plans in the country.
India’s fledgling EV market accounted for just 5,000 of a total of 2.4 million cars sold in the country last year as negligible charging infrastructure, and the high cost of electric cars deterred buyers.
By contrast, China, where Tesla already makes cars, sold 1.25 million new energy passenger cars, including electric vehicles, in 2020 out of a total of 20 million cars sold, accounting for more than a third of Tesla’s global sales.
India also doesn’t have comprehensive EV policies like China, the world’s largest car market, which obliges companies to invest in the sector.
Gadkari said India is not only a large market, but also an export hub, especially now that about 80 percent of lithium-ion battery components are made locally.
“I think it’s a win-win situation for Tesla,” Gadkari said, adding that he also wanted to talk to Tesla about building a high-speed hyperloop between Delhi and Mumbai.
India is working on a production-related incentive scheme for auto and auto parts manufacturers and for setting up advanced battery production units, but details have yet to be finalized.
Shifting to cleaner energy sources and reducing vehicle pollution are considered essential for India to meet the climate commitments of the Paris Agreement.
India introduced stricter emissions regulations for car manufacturers last year to make them meet international standards. It is now looking at tightening fuel efficiency regulations from April 2022, which, according to industry executives, could force some carmakers to add electric or hybrid vehicles to their portfolio.
Plagued by the COVID-19 pandemic, the industry says it will take longer to make the transition.
Gadkari said he was not directly responsible for the decision whether or not to postpone, but was confident that India would honor its Paris Treaty commitments without disrupting economic growth.
“Development and the environment go hand in hand. We will need some time, but we will soon reach international standards,” he said.