The electric vehicle (EV) company Tesla is looking for locations in India to establish a production facility, according to a Financial Times report.
The anticipated cost of the proposed facility is between $2 billion and $3 billion. The report further cites that Tesla appears to be concentrating on well-established auto centres in Tamil Nadu, Gujarat and Maharashtra.
This comes after the Indian government lowered import taxes on some EVs for manufacturers who agreed to invest $500 million or more and start producing the vehicles domestically within three years. This policy seeks to build a strong domestic EV ecosystem while attracting leaders in the global EV space.
Last month’s government statement highlighted, “The government is actively promoting India as a manufacturing hub for EVs with the latest technology.”
Previously, on a state visit to the US in June 2023, Prime Minister Narendra Modi met Tesla CEO Elon Musk and invited him to visit India to discuss investment potential in the country’s electric vehicle (EV) business.
In 2021, the government introduced the Production-Linked Incentive programme for cars and auto parts. Under this programme, firms that set up domestic production facilities can receive financial support. With a $3.1 billion budget over five years, this programme aims to encourage homegrown auto production and lessen reliance on imported cars.
Besides, intense rivalry exists in the worldwide EV industry, which may affect Tesla’s prospective entry into the Indian market.
For instance, in Q4 2023, the Chinese multinational BYD overtook Tesla as the world’s top electric vehicle producer; however, Tesla reclaimed the top rank in Q1 2024.
Nearly 60% of all EV sales worldwide come from the Chinese market, where local firms like BYD, Xpeng, and Xiaomi are actively vying with one another on price and the introduction of new models.
India’s sales of EVs rise in the 2024 fiscal
In fiscal year 2024, India’s EV market recorded sales that broke all previous records. 1.66 million EVs were sold nationwide, a startling 41% rise from the year before.
March 2024 was very successful, with over 197,000 units sold, breaking previous records. A preemptive buying frenzy before the expiration of the FAME-II subsidy scheme, which encouraged EV purchases, can be partially blamed for this spike.
Since then, the government has introduced the Electric Mobility Promotion Scheme 2024, giving Rs 500 crore to provide up to July 2024 with help to purchase electric two- and three-wheelers.
Data from the government’s Vahan website shows that, between April 2023 and March 2024, 1,665,270 EVs were purchased in India; this translates to an average of 4,562 EVs sold daily, as opposed to the 3,242 EVs sold on a daily average during the previous fiscal year.
Reportedly, India’s two- and three-wheeler segments accounted for 94% of all EV sales, dominating the EV market. Electric two-wheeler sales accounted for 56% of the market, showing a robust 29% annual growth. Three-wheelers accounted for 38% of all EV sales and had an astounding 57% rise.
Car and SUV sales data increased to 90,033 units, an 89% increase over the prior year’s figures.
