American EV manufacturer Tesla is planning to set up a manufacturing unit in India. This new plant will be built in Karnataka, as confirmed by the state government in a recent document outlining the highlights of India’s budget. Last month, the company had registered in India under ‘Tesla Motors India and Energy Private Limited’, with its registered office in Bengaluru. Bengaluru is a hub for global technology companies, and it also has one of the strongest EV infrastructures in India.
As such, it wouldn’t be a surprising move by Tesla to establish its manufacturing facility in/near Bengaluru. Also, local manufacturing/assembly will allow Tesla to price its vehicles more competitively in India. Tesla CEO Elon Musk had been teasing the company’s entry into the Indian market for quite a while, and in December last year, he confirmed on Twitter that the company will launch its first vehicle in our market in 2021. Union minister Nitin Gadkari also confirmed the same in December 2020, stating that Tesla will begin operations in India in early 2021.
India has been promoting electric vehicles, in order to reduce dependence on oil imports. However, there have been plenty of challenges to that, the biggest of which is the lack of a nation-wide EV infrastructure. Charging stations for electric cars are mostly only available in large cities, and that too in limited numbers, especially compared to fuel pumps. As such, buying an EV is still not as practical an option as purchasing a petrol/diesel-powered vehicle.
Also, EV manufacturers in India have to rely completely on imports for critical components, like batteries. To attract investment in local advanced battery manufacturing, the government of India had planned incentives of up to Rs. 4.6 billion last year. Tesla’s global lineup currently consists of four models – Model 3, Model Y, Model S, and Model X. The most affordable among these is Model 3, with a starting price of $37,990 (around Rs. 27.6 lakh) in its home market. Tesla Model 3 is expected to be the first offering by the US manufacturer for the Indian market.