The Indian government is reportedly on the verge of finalizing an agreement with Tesla, a move which would finally allow automaker to import its electric vehicles (EVs) into the country starting as soon as next year. A formal announcement is expected at the Vibrant Gujarat Global Summit in January, with states like Gujarat, Maharashtra, and Tamil Nadu being prime candidates for a local manufacturing plant due to their established ecosystems for electric vehicles.
As part of the potential agreement, Tesla is set to make an initial investment of around $2 billion for the manufacturing plant, signaling their firm commitment to the Indian market. Moreover, plans are underway to significantly increase purchases of auto parts from India, potentially reaching up to $15 billion. In a bid to reduce costs further, Tesla is exploring the possibility of manufacturing batteries within India, Bloomberg reports.
India, led by Prime Minister Narendra Modi’s push for increased domestic manufacturing of electric vehicles, has seen a surge in demand for cleaner transportation. However, the electric vehicle market in the country faced challenges, constituting only 1.3% of total passenger vehicle sales last year, primarily due to high upfront costs and an insufficient charging infrastructure.
To overcome these obstacles, Tesla aims to localize production, a move that could substantially reduce costs and make Tesla vehicles more accessible to the Indian market. High import taxes have deterred Tesla from directly importing cars into India.