Tesla team to scout sites for $3-billion India EV plant: report

US electric automaker Tesla is planning to send a team to India to scout locations for a proposed electric vehicle (EV) plant, Financial Times reported, citing two people aware of the Elon Musk-led company’s plans. 

FT reported that Tesla would send a team from the US by late April to study sites for the potential plant in Maharashtra, Gujarat, and Tamil Nadu.

While Haryana, near Delhi, is also one of the potential choices for Tesla, the company is said to be looking for a site near a port, which would make it easier for Tesla to export cars. 

The report said Tesla was planning to invest $2-3 billion for the manufacturing plant. 

The move comes two weeks after India approved a scheme allowing companies to import up to 8,000 EVs per year at a lowered tariff if they plan to set up manufacturing facilities in India within three years. 

Tesla had been pushing for a lower import tariff for its vehicles during negotiations with the Indian government. 

In a separate development, Tesla has begun manufacturing right-hand drive cars for the Indian market at its Berlin plant, Hindustan Times reported on Thursday, citing people aware of the company’s plans. 

The Berlin-made cars are likely to be rolled out on Indian roads later this year, the report said.

Earlier in November, Bloomberg had reported that India was nearing a deal with Tesla to import its vehicles from 2024 and the US electric carmaker was also likely to set up a factory in India over the next two years.

In June 2023, Tesla chief executive officer Elon Musk said that the automaker planned to make a “significant investment” in India and that he intended to visit in 2024.

During his visit to the US at the time, Prime Minister Narendra Modi urged Musk to explore opportunities in India for investments in electric mobility and the commercial space sector. Musk is also the founder and CEO of SpaceX, one of the largest private firms operating in the space sector.  

Musk has repeatedly voiced concerns about India’s steep import taxes and EV policies. India, on the other hand, has been hesitant to allow Tesla to sell its made-in-China cars while the Modi government has launched several schemes to promote manufacturing in the country. 

New EV policy 

The EV policy approved by the government in March aims to promote India as a manufacturing hub for EVs. As per the new policy, companies that set up manufacturing facilities for e-vehicles will be allowed to import up to 8,000 EVs per year for years at lower customs duty of 15%. 

Such companies will have to set up manufacturing facilities and start commercial production of EVs in India in three years, and a localization level of 25% by the 3rd year and 50% by the 5th year will have to be achieved. 

Minimum investment required for the manufacturing facilities is ₹4150 Cr ($500 million). 

The total number of EV allowed for import would be determined by the total duty foregone or investment made, whichever is lower, subject to a maximum of ₹6,484 crore ($777 million), which is equal to incentive under PLI scheme.

Vehicle of CIF (cost, insurance, and freight) value of $35,000 or above will be permissible.