Tesla in India: Elon Musk’s expected visit to India in April has sparked hope for Tesla’s arrival in the country. Tesla, an American EV brand, has been trying to expand its business in India for a long time now but high import duties and the government’s ‘Make in India’ policy have been a big hurdle.
Elon Musk To Visit India in April-EV market potential in India and Tesla’s hurdles
Recently a meeting was also set up between the Prime Minister of India, Narendra Modi, and Elon Musk, when the former was in the US. After the meeting, he told the reporters that he is confident that Tesla will be in India and that they will do this as soon as humanly possible.
Musk and PM Modi is all set to come together again in April 2024 for the further discussion.
The Electric Vehicle (EV) market in India has been rapidly growing which is also driven by government incentives and society’s rising focus on sustainability. This market is expected to witness exponential growth in the coming years. According to a report by McKinsey & Company, India’s EV market could reach a staggering $50 billion by 2030, making it one of the most attractive EV markets globally.
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But despite this rapid growth, Tesla’s path to entry into the market has not been possible. This is because of two major reasons. One of the biggest hurdles has been the country’s steep import duties on electric vehicles. These import duties inflate the price of Tesla cars significantly, making them unreasonably expensive for most Indian consumers. The second reason has been the Indian government’s strong push for “Make in India” policy.
Under this policy, local manufacturing is prioritised to stimulate domestic industry growth and job creation. This policy clashed with Tesla’s current strategy of relying heavily on overseas production facilities.
A Turning Point
The Indian government has made current changes in their policy which can help to smoothen the path for Major EV players like Tesla. The government seems to be recognising the potential for the EV revolution. In a major policy shift announced in 2023, the government relaxed import duties for electric vehicles manufactured in India.
This move is an incentive for companies like Tesla to set up local manufacturing plants. The will not only make their cars more affordable but will also align with the “Make in India” goals.
Local manufacturing of Tesla cars
In March 2024, Tesla’s representatives were said to scout for potential locations for car manufacturing plants. These plants would require an investment of about $ 2 billion, which is approximately Rs 1.66 lakh crores. Initially, Tesla was importing cars from China for RHD ( right-hand driven) markets. However, the Indian government made their intention clear to Tesla about the ‘No China’ policy. Tesla expects to build the factory in about 2 years and has been looking at the southern states of Tamil Nadu, Maharashtra in the west, and Gujarat.
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