India is closing in on an agreement with Tesla Inc. that would allow the US automaker to ship its electric cars to the country from next year and set up a factory within two years, according to people familiar with the Indian government’s thinking.
As part of the potential agreement, Tesla is expected to commit an initial minimum investment of approximately $2 billion for the plant, with plans to escalate purchases of auto parts from India to as much as $15 billion.
Additionally, the US automaker aims to manufacture some batteries within India to reduce costs, Bloomberg sources disclosed.
An official announcement is anticipated at the Vibrant Gujarat Global Summit scheduled for January, with the states of Gujarat, Maharashtra, and Tamil Nadu being under consideration due to their well-established ecosystems for electric vehicles and exports, the report added.
Tesla’s CEO, Elon Musk, mentioned in June that Tesla intends to make a “significant investment” in India and he plans to visit in 2024. So far, there has been no official comment regarding the same.
Electric cars made up only 1.3% of all passenger vehicles sold last year. This is because electric cars are expensive and there aren’t many charging stations.Tesla doesn’t currently import cars directly into India because of high tariffs. But when its first locally made cars go on sale, they could cost as little as $20,000.
Last week, Union Minister Piyush Goyal visited the Tesla factory in Fremont, where the elected representative was scheduled to meet Elon Musk. However, the meeting couldn’t happen due to Musk’s health but the billionaire promised to meet the minister soon. Goyal met the top leadership from India including researchers and engineers from India at the Tesla factory.