Tesla Plans Indian Plant: Scouting Locations, Eyes Manufacturing Expansion

Tesla Motors, the US electric vehicle giant, is gearing up to explore sites for its proposed $2-3 billion electric vehicle plant in India. According to a report by the Financial Times, a team from Tesla will visit India by late April to assess potential locations, focusing on states with established automotive hubs such as Maharashtra, Gujarat, and Tamil Nadu.

Scouting Locations:

• Tesla will dispatch a team from the US to India by late April to survey potential sites for the plant.
• The focus will be on states with existing automotive hubs, including Maharashtra, Gujarat, and Tamil Nadu.

Policy Support:

• The move follows the recent release of a new electric vehicle (EV) policy by the Indian government, which offers duty relaxation for a limited number of EV imports for manufacturers investing in local facilities.
• The policy aims to attract investment from companies like Tesla by lowering import duties, facilitating their entry into the Indian market.

India’s Growing Auto Sector:

• India is the world’s third-largest vehicle market and one of the fastest-growing automotive markets globally.
• The automotive sector’s current market size is Rs 12.5 lakh crore, expected to exceed Rs 24.9 lakh crore by 2030, contributing over 7.1 percent to India’s GDP.

Potential Sites:

• While some automakers have plants in Haryana, Tesla may also explore potential locations around the capital.
• The government has offered significant subsidies to promote manufacturing, particularly in critical sectors like EVs, aligning with India’s aim to become a global manufacturing hub.

Modi-Musk Interaction:

• Indian Prime Minister Narendra Modi urged Tesla CEO Elon Musk to invest in India during their meeting in the US last year.
• Musk expressed intentions to enter India at the earliest feasible opportunity, indicating the company’s interest in the Indian market.

Manufacturing Strategy:

• Tesla is considering manufacturing a smaller, affordable vehicle priced at under $30,000 in its proposed Indian factory.
• This model could be targeted not only at the Indian market but also at Southeast Asia, the Middle East, Africa, and parts of Europe.

Global Expansion Plans:

• Tesla’s potential plant in India is part of its global expansion strategy, aimed at establishing manufacturing facilities worldwide.
• The company is also building a plant in Mexico, set to be operational by 2026.

Investment Outlook:

• Tesla anticipates an initial investment of $2-3 billion in the Indian plant, with additional contributions from suppliers, potentially making it one of India’s largest foreign direct investments.
• The factory is expected to have an annual production capacity of up to 500,000 vehicles when fully operational.

Battery Plant Consideration:

• Tesla is also contemplating the establishment of its battery plant in India, following the “gigafactory” model implemented at its plants in California, Texas, Berlin, and Shanghai.
• This integrated approach would involve suppliers setting up facilities near the main plant, enhancing manufacturing efficiency.

Tesla’s plans to establish a manufacturing presence in India signify a significant step towards expanding its global footprint and tapping into the country’s burgeoning automotive market.