Tesla Likely To Foray Into India By This Year, May Roll Out Compact E-car By 2022

Avishek Banerjee Jan 01, 2021

At a time when the government is coming up with a slew of sops for electric vehicles, Tesla Inc, the world's most innovative car maker is contemplating an entry into the Indian market by next year. The world’s renowned electric vehicle and clean energy company, which was initially planning to import cars from China due to lower import duties and logistical factors, may now resort to its earlier plans of shipping in products from its mother facilities in the US.

Now the buzz of its India foray gets louder as Union Road Transport Minister Nitin Gadkari at the Indian Express Idea Exchange confirmed that the US electric car maker will begin its operations in India with sales operations by early 2021 and then foray into assembly and manufacturing of electric cars, depending on the demand.

“India is going to become the number one manufacturing hub for automobiles in five years," the minister said.

Tesla's entry could come at a time when Prime Minister Narendra Modi is increasingly becoming focussed on promoting the use and manufacture of electric vehicles. India will be the next automatic frontier for Tesla after it started rolling out cars from its factory in China, world's largest car market. In the distant past (2015) Tesla has welcomed Modi to its plant in San Jose, California and the American company had eyed an entry into India in early 2017, though the plans didn’t fructify.

In October, Tesla’s chief executive officer Elon Musk had indicated that the company will foray into the Indian market in 2021. While the Palo Alto, California-based firm would be bringing in Model 3 sedan (at Rs. 55 lakh and above) and Model Y SUV (at Rs. 50 lakh and above) in the initial phase (2021-22), its next-in-line unchristened compact car (to be priced at US$ 25,000) could also be rolled out from the Indian market if the central government provide adequate support.

According to a well-informed source requesting anonymity, “Tesla is looking at not just selling cars in India but also gain volumes in the long run. The one model which will give it the maximum numbers would be its upcoming, least priced model from its global portfolio. To be positioned below the Model 3 sedan, the compact e-car could also be a locally built model if the government doesn’t impose too many duties on certain parts and subsystems.”

While Tesla global spokesperson could not be reached for comments, an emailed query sent to its APAC spokesperson to confirm the development could elicit any response until press time.

It is to be mentioned that Tesla Inc’s CEO Elon Musk had said a $25,000 electric car with next-gen battery for global markets is already in the works. He maintained that it will dramatically reduce the cost of its battery cells and packs with the launch of this model.

“Tesla’s entry in India can be the inflection point for electric vehicles in India in passenger vehicle category. The duty structure is already very amicable for EV in India and this added with benefits from state government and Fame 3 scheme will give a run to its competitor in diesel and gasoline segments, stated Puneet Gupta, associate director, IHS Markit.

Elon Musk in a tweet had earlier maintained, "Would love to be in India. Some challenging government regulations, unfortunately." At that time, he had also maintained that the company is engaged in discussions with the government for providing temporary relief from import restrictions and duties till it sets up a local manufacturing facility. However, there was no headway after that.”