Elon Musk's Tesla to send team to India to scout locations for $3 billion EV plant: Report

Billionaire Elon Musk-led EV maker Tesla is reportedly setting its sights on India, planning to explore locations for a proposed electric vehicle (EV) plant, estimated to cost between $2 billion and $3 billion.

The move comes after the Indian government announced incentives for EV manufacturers, including reduced import taxes for those committing to significant local investments.

According to an FT report, Tesla will send a team from the United States to India by late April to study potential sites, focusing on states known for their automotive hubs, such as Maharashtra, Gujarat, and Tamil Nadu. These states also offer the added benefit of port access for exports, the report said. 

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The role of the Indian EV policy

The Indian government recently adjusted its EV policy to attract foreign investment, reducing import duties for electric vehicles under specific conditions.

These include a commitment to invest around Rs 4,150 crore ($500 million) and to start commercial production within three years. Tesla, having sought more favourable terms for entering the Indian market, appears to be responding positively to these changes.

The government's strategy aims to boost EV adoption, reduce oil imports, and meet carbon reduction targets.

How will Tesla's entry benefit the Indian automotive industry

Tesla's potential establishment of a manufacturing base in India is expected to have far-reaching implications for the local automotive industry. Analysts predict that Tesla's presence could stimulate further investments in the EV sector and benefit Indian auto parts makers.

The new EV policy also mandates an increase in localisation levels, which could help the Indian automotive sector access global technologies and improve cost competitiveness.

Establishing a battery gigafactory in India

Beyond the immediate plans for an EV plant, Tesla may also consider establishing a battery gigafactory in India, similar to its operations in California, Texas, Berlin, and Shanghai.

The expansion aligns with Tesla's strategy to support its manufacturing capabilities with local suppliers and could make India a key player in Tesla's global network. The potential for exporting vehicles to markets in Southeast Asia, the Gulf, Africa, and Europe further underscores the strategic importance of the Indian plant in Tesla's global ambitions.