Tesla is currently not interested in establishing manufacturing operations in India
Tesla has shown a clear reluctance to engage in local manufacturing of electric vehicles (EVs) in India, even though the country currently offers significant incentives to encourage such investments.
Other automotive companies interested in India's offer, but not Tesla
India's EV policy was introduced in March 2024 and has been in development since. It aims to attract global automotive giants like Tesla to create their products locally.
Tesla has expressed its reluctance thus far. According to Heavy Industries Minister HD Kumaraswamy, other automotive giants like Mercedes-Benz, Volkswagen, Hyundai, and Kia have shown interest in India's EV manufacturing policy.
“Tesla, we don’t really expect (interest) from them... They are not interested in manufacturing in India,” Kumaraswamy said.
Skoda Auto Volkswagen India also seems cautious and has stated that it is closely monitoring the development of EV-related policies in India and assessing their implications.
“On this basis, we define the appropriate next steps in line with our long-term strategy,” the company stated in a release.
With the policy in place, companies will be able to import a limited number of electric cars at a reduced duty of 15% compared to the current 70%. However, there is a condition. Only companies that commit to investing around $500 million to build EVs in the country are eligible, said the Heavy Industries Ministry.
Companies will also need to establish manufacturing facilities in India, start operations within three years of approval, and meet certain local content requirements.
Currently, EV sales in India are dominated by Tata Motors, which accounted for only 2.5% of the total 4.3 million cars sold in 2024. The government aims to increase this figure to 30% by 2030.
Tesla's hesitation to enter the Indian market
Tesla's refusal to jump on India's offer may stem from several factors. As previously indicated, Musk complained that the country's import duties were too high, and the insistence on local manufacturing seems to have created a deadlock as he had put his investment plans in India on hold last year.
Despite the benefits offered by the policy, Tesla has not presented a formal plan for local production and has instead focused on establishing showrooms in cities like New Delhi and Mumbai to sell imported vehicles.
Another possible reason for Tesla's reluctance is the lack of fast chargers, which has deterred potential buyers in the relatively new EV market in the country. India has limited EV charging infrastructure, well below what is needed for mass adoption, and there are also challenges in establishing a local supply chain, especially since there are tensions between India and China, where most of Tesla's suppliers are based.
Rather than starting to manufacture its products in India, Tesla seems more interested in using its existing global factories, with a capacity of 3 million vehicles, to produce more affordable models by mid-2025.
This could be a smarter bet as current Tesla prices are significantly above the affordability threshold for most Indian consumers, who tend to prefer cars under $15,000.
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