Photographer: Angel Garcia / Bloomberg
Photographer: Angel Garcia / Bloomberg
Tesla Inc. is nearing an agreement to make electric vehicles in India for the first time, providing a new growth opportunity after setting up production in China.
Tesla has chosen Karnataka, a southern state whose capital is Bangalore, as its first factory, the state’s prime minister said over the weekend. The carmaker has been negotiating with local officials for six months and is actively considering car assembly in the outskirts of Bangalore, people familiar with the matter say.
Tesla did not immediately respond to requests for comment and did not confirm the minister’s statement.
The company is conducting due diligence on office real estate in the region and plans to set up an R&D facility, said the people, who asked not to be named as the case is private. Tesla has focused on Bangalore as it is taking shape until be a hub for electric vehicles and aerospace manufacturing talent, they said. Tesla has located its Indian unit and registered office in the center of Bangalore.
Chief Executive Officer Elon Musk pretty much confirmed that Tesla would be entering India in January after months of speculation. The richest man in the world on January 13 tweeted “as promised” in response to one report on a Tesla-focused blog that the automaker was in talks with several Indian states to open an office, showrooms, a research and development center and possibly a factory.
That revelation sparked euphoria among locals such as Nikhil Chaudhary, a 20-year-old student at Delhi University who helped start India’s Tesla Fan Club in 2019.
Despite the hype, Tesla’s foray to India could prove challenging. The country has not yet rolled out the electric vehicle welcome mat, as did neighboring China, where Tesla set up its first factory outside the US and now dominates sales of premium electric vehicles.
According to BloombergNEF, electric vehicles account for about 5% of annual car sales in China, compared to less than 1% in India.
According to the International Energy Agency, about 60% of the world public slow and fast charging points are in China. As Chinese automakers roll out competing EV models and develop a diverse ecosystem, the country is “on track to disrupt the current global automotive landscape,” analysts from UBS Group AG wrote in a report last month.
A Model 3 vehicle drives off an assembly line at a ceremony at Tesla’s Gigafactory in Shanghai in December 2019.
Photographer: Qilai Shen / Bloomberg
India has taken similar steps, but not yet on the same scale.
In 2015, it launched a Faster Adoption and Manufacturing of Hybrid and EV (FAME) plan, with a pledge of 9 billion rupees ($ 123 million) in grants covering everything from electric tricycles to buses, according to the IEA. A The second generation of the FAME program introduced in 2019 was larger, with 100 billion rupees to encourage EV purchases and build charging infrastructure.
India also lowered the goods and services tax on electric vehicles to 5% from 12%, as of August 2019, much lower than the taxes of a whopping 28% on other motor vehicles, which have been criticized by companies such as Toyota Motor Corp.
Read more: India has 150 million drivers and only 8,000 want electric cars
– Assisted by Bruce Einhorn, Ragini Saxena and Vlad Savov