Tesla plans to make India a central export hub for its APAC and African markets

• Tesla will likely begin operations in India with either the Model 3 or Model Y. 
• Sources indicate that Tesla is looking at potential sites in Southern India and Gujarat.
• The ambitious plans include constructing a gigafactory in India with an annual production capacity of approximately half a million electric vehicles.

Tesla has had quite a ride in India – with countless hurdles that eventually stopped the electric vehicle giant from expanding into the South Asian nation. However, things took a new turn when Tesla’s chief, Elon Musk, met the country’s Prime Minister in person last month. By the end of that meeting, Musk expressed his company’s keenness to establish a presence in India “as soon as humanly possible.” 

That was enough indicator for the world to know that Tesla would reattempt its entry into the Indian market, this time with the government’s support. It was early last year when India turned down a demand by Tesla for tax breaks to import electric cars. The Narendra Modi government wants the US carmaker to manufacture in India as a precondition to easing duties. 

But Tesla’s shown no inclination to oblige. Thus, it eventually shelved its India debut – which may ultimately take place sooner than later. Some local reports indicated that Tesla would likely begin operations in India with either the Model 3 or Model Y. 

The news came after Tesla representatives met India’s commerce minister late last month to discuss plans to build a factory to produce what the company has described as an all-new US$24,000 car.

Speaking with Reuters, a person with direct knowledge of the matter said that Tesla has expressed an interest in building a factory in India that would produce low-cost electric vehicles (EVs) for the local market and export. 

Most recently, sources have told Business Today TV separately that the EV giant is set on creating a significant export hub in India, with a plan to target the Asian Pacific and African markets. 

Sources indicate that Tesla is looking at potential sites in Southern India and Gujarat. “An initial proposal submitted by the company reveals ambitious plans to construct a gigafactory in India. This state-of-the-art facility is envisaged to have an annual production capacity of approximately half a million EVs,” Business Today said.

Interestingly, following the reassurance from Modi himself, Tesla’s expansion will go beyond manufacturing operations. The Business Today report said Tesla aims to establish a comprehensive charging infrastructure throughout the country, addressing one of the critical concerns for the widespread adoption of EVs.

To recall, during Modi’s trip to the US in June, Musk shared that he has plans to visit India next year. “We will be able to announce something in the future. It is quite likely there will be a significant investment in India,” Musk highlighted, adding that he had an excellent conversation with the Prime Minister.

Musk also shared his confidence that Tesla will be in India, and he has no plans to delay the necessary moves. 

Is 2024 the year of Tesla and Starlink in India?

After meeting Modi, Musk, who also heads SpaceX, said he looks forward to bringing Starlink to India. “The Starlink Internet […] can be beneficial for remote or rural villages where they either have no access to the Internet or the Internet is very expensive and slow.”

Reiterating the plans to have Tesla invest in India, Musk said he is hopeful to be able to “announce something in the not-too-distant future.” While the Tesla chief did not intend to “jump the gun” on an announcement, he said, “It is quite likely that it will be a significant investment in our relationship with India.”

Tesla’s ambitious plan in India would rely on the tax or duty waivers provided. There are even talks that Musk’s hopes to set up an EV factory in India may take another significant setback – and for the same reasons. The Indian Finance Ministry is still not considering providing any tax or duty waivers to Tesla.

According to Reuters, Revenue Secretary Sanjay Malhotra said the finance ministry of India has no plans to grant any duty or tax exemptions to the American automaker. Tesla’s entry into the Indian EV market holds great potential for the company and the country. Still, significant challenges, such as charging infrastructure and pricing, need to be dealt with.

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