In a major setback for China, Elon Musk-led Tesla is planning to import electric vehicles (EVs) from its German factory, instead of its manufacturing unit in China, as the EV carmaker prepares to enter the growing Indian EV market in the coming future. Initially, Tesla plans to sell these German-imported EVs in India, and later set up manufacturing units across India, with negotiations underway with several state governments, including Gujarat, Maharashtra, Tamil Nadu and Telangana.
Notably, Tesla want to take advantage of the Narendra Modi government’s new EV policy that aims to boost EV production and adoption in India. The policy has introduced various concessions to entice global firms to manufacture electric vehicles in India, subject to some conditions.
As per the policy, companies will be permitted to import 8,000 EVs at a concessional 15 percent custom duty (compared to the current 11o percent), but the concession can only be availed by companies who invest a minimum Rs 4,150 crore to manufacture electric vehicles in India.
Citing sources, a Times of India (TOI) report said a probable Tesla investment has triggered an atmosphere of both excitement and nervousness in many states where potential factories will likely be built, adding that the states plan to start talks with Tesla management as soon as possible.
According to reports, Tesla is considering various factors to choose potential sites for its factories, with Tamil Nadu, Maharashtra, and Gujarat being the top contenders. While Tamil Nadu and Maharashtra are already major automobile manufacturing hubs, Gujarat is also emerging as a hub of foreign investment in recent years.
All three states provide easy access to ports, which is an important factor as Tesla initially plans to import the EV from its German factory.
Elon Musk-led Tesla has presented its initial plan to the Indian government, which states that the company aims to set up a manufacturing plant with a capacity of 5 lakh at an investment of $2-3 billion. Tesla plans to make an all-new budget EV for India, which is expected to be priced at around Rs 20-25 lakh.
Tesla’s Berlin factory, which produces Tesla Model Y, will now manufacture right-hand drive cars, that will will be shipped to India.
Notably, US President Donald Trump has said if Elon Musk’s Tesla built a factory in India to avoid that country’s tariffs, it would be unfair to the US. In a recent interview with Fox News’ Sean Hannity, Trump said that during their meeting he told Prime Minister Modi that India charges the highest tariffs in the world.
“Every country in the world takes advantage of us, and they do it with tariffs… It is impossible to sell a car, practically, in, as an example, India,” he said, adding that it is “impossible” for Musk to sell a car in India.
“..If he (Musk) built the factory in India, that’s okay, but that’s unfair to us. It’s very unfair,” Trump said in the interview during which Elon Musk, who heads the Department of Government Efficiency (DOGE), was also present.
(With PTI inputs)
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