Tesla looks to set up factories in India, holds discussions with government

Elon Musk-backed electric car maker Tesla has held discussions with union government officials to work on the possibilities of bringing the company's auto parts and car assembly chain to the Indian auto space, media reports stated.

This comes after the Tesla CEO, Musk, held a discussion with Prime Minister Narendra Modi during the State Visit last month. As reported by Republic earlier, Musk has been eyeing the Indian market since 2019, when he met PM Modi in 2015. 

Recent updates on Tesla's entry to India

Reports add that the discussion involved receiving incentives and tax breaks in the process. The entry of Tesla to India could rapidly expand the volume of the electric market in India, which at present is dominated by other players like Tata, Hyundai, MG and Mahindra & Mahindra.

At present, Tesla has a single manufacturing facility for the South Asian market which is based in China. Experts had earlier cited that the entry of the US automakers will mature the Indian EV sector to become a robust space.

Consumers should be catered by offering competitive prices, which could be a challenge | Image Credit: Pixabay

At present, Tesla wishes to bring its own supply chain ecosystem in India, whereas the government has asked the company to consider the case of working out with the existing auto components supply chain available in the country.

"We asked them about their specific needs and also urged them to consider sourcing their needs from the Indian ecosystem," said a senior government official, who did not wish to be identified. “But these companies have a well-oiled system of their suppliers. These are initial talks so we are hopeful of making some headway."

Further, the highlights of the meetings reveal that the Tesla US and Tesla Indian executives sought to know the structure of the incentives that they are likely to receive to set up the manufacturing space in India.

In addition to the meeting with the government, reports also state that the company has held discussions with industry executives. The company held discussions with the Society of Indian Automobile Manufacturers in New Delhi and emphasised the option of bringing its own suppliers to India.

Is market disruption possible after Tesla's entry to India?

Entry to India can definitely be a game changer. Experts have, however, highlighted that batteries remain a major concern for the Indian market space and Tesla's entry would cater to that need as it could set up its own manufacturing hubs.

On the economic side, the market in India should also be catered by offering competitive prices. This could be a major challenge for the company.

Recent discussions with the government reveal that the company would start the price at Rs 20 lakh. However, the average price range for an electric car is between Rs 8 lakh to Rs 14 lakh.