Electric vehicle

Tesla Nears Agreement for Vehicle Exports to India and Plans $2 Billion Factory

• ByStartupStory     |    November 22, 2023

Tesla, led by Elon Musk, is reportedly nearing an agreement with India that would permit the electric car manufacturer to export its vehicles to the country starting in 2024. As part of the deal, Tesla aims to establish a factory within two years, with a potential announcement anticipated at the Vibrant Gujarat Global Summit in January, according to sources familiar with the matter, as reported by Bloomberg on Monday.

Insiders revealed that the states of Gujarat, Maharashtra, and Tamil Nadu are being considered for the factory location due to their well-established ecosystems for electric vehicles (EV) and exports. Tesla is expected to commit an initial minimum investment of approximately $2 billion in the plant, with plans to increase auto parts purchases from India to as much as $15 billion. The company is also exploring the possibility of manufacturing batteries in India to reduce costs.

Indian Trade Minister Piyush Goyal recently visited Tesla’s factory in California’s Fremont, expressing admiration for the automaker’s ties with New Delhi. Minister Goyal mentioned that Tesla is on course to double its imports of components from India, emphasizing the growing importance of Indian auto component suppliers in Tesla’s EV supply chain.

The Modi government has been actively promoting domestic EV manufacturing and encouraging the rapid adoption of cleaner transport. The demand for EVs is reportedly rising among India’s aspirational middle-class consumers, presenting an opportunity for Tesla. Currently, the high tariffs prevent Tesla from directly importing cars to India, but when locally manufactured cars hit the market, they could potentially be priced as low as $20,000, as per Bloomberg.

Elon Musk has previously criticized India’s high import taxes and EV policies. In return, India has advised Tesla not to sell cars in the country that are manufactured in China. The evolving partnership between Tesla and India aligns with the government’s push for a cleaner and more sustainable transportation landscape.

 

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