India closer to signing deal with Tesla to set up factory

Tesla in India: Tesla is closer to signing a deal with India, that would allow the US automaker to ship its electric cars to the country from next year and set up a factory within two years, reported Bloomberg. As per the report, an announcement could come at the Vibrant Gujarat Global Summit in January.

Tesla in India - EV Manufacturing unit

Gujarat, Maharashtra and Tamil Nadu are under consideration for setting up the unit as they already have well-established ecosystems for electric vehicles and exports. On investment, the report mentioned that Tesla would commit an initial minimum investment in any plant of around $2 billion and would look to increase purchases of auto parts from the nation to as much as $15 billion. To bring down the costs, the US automaker might make some batteries in India.

Also Read:Tesla plans to double Indian component imports: Piyush Goyal

In June this year, Tesla CEO Elon Musk said that the EV car maker is planning to make significant investment in India and visit the country in 2024.

EV Market Demand in India

As per Bloomberg, breaking into the world’s most-populous nation, where demand for electric vehicles is growing among aspirational middle-class consumers, would be a boon for Tesla, which currently has factories in the US, China and Germany.

India has also been pushing to increase domestic manufacturing of EVs and encourage a more rapid adoption of cleaner transport. According to BloombergNEF, out of the total passenger vehicles sold last year battery-powered cars accounted for just 1.3%. Dearth of charging points and high cost has made the buyers hesitant to make the switch.

As per Bloomberg, when Tesla's first locally made cars do go on sale they could retail for as little as $20,000. Tesla do not import cars directly into India because of high tariffs that are levied.