Tesla offers strong subsidies for manufacturing in India

It’s no secret that India is looking to woo Tesla to set up local operations which are beyond sales. A new proposal sheds light on how the...

It’s no secret that India is looking to woo Tesla to set up local operations which are beyond sales. A new proposal sheds light on how the government plans to do that.

Transport minister Nitin Gadkari told Reuters that India is ready to offer incentives and ensure Tesla’s cost of production is lower than those in China if the electric car maker commits to local manufacturing. “The government will make sure the production cost for Tesla will be the lowest when compared with the world, even China, when they start manufacturing their cars in India. We will assure that,” he said.

The proposal is meant to encourage Tesla to set up complete vehicle production and work with local vendors, rather than being limited to assembly. “Then we can give higher concessions,” Gadkari said without elaborating on how the plan would be incentivized.

He also touched upon how he wants to eventually see a Hyperloop between Mumbai and Delhi — which is the busiest air route in India.

Tesla’s Gigafactory 3 in Shanghai, which was up and running in a record 168 days, is already at a production capacity of 2,50,000 units a year. That figure is expected to reach 4,50,000 by the end of this year. China accounts for more than half of the world’s 2.4 million electric sales last year, while India sold just about 5,000. Apart from low demand, the Elon Musk-led company will also face the challenge of inadequate charging infrastructure.

Earlier this year, Tesla registered a company in India, with sales expected to commence in mid-2021. This is expected to include importing and selling Model 3 sedans for now.

India’s journey with electric vehicles is still in its infancy, with few policies to encourage adoption. Campaigns such as Switch Delhi are taking the right steps to educate and promote EVs, but it’s limited to the NCR region for now. The scenario is relatively better for electric scooters, as two-wheelers continue to be the preferred mode of transportation in India, clocking over 17 million sales in FY 2020 (source: Statista).

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