The recurring speculation regarding Tesla's potential investment in India has resurfaced, with reports suggesting the electric car giant is open to committing up to $2 billion for a manufacturing facility in the country. However, the decision hinges on the resolution of import duties for electric vehicles (EVs).
As per sources cited by Economic Times (via Reuters), Tesla is exploring the possibility of investing if import duties on EVs are adjusted. Presently, imported electric vehicles in India face a steep import tax, reaching up to 100% for cars priced over approximately $40,000, and 70% for more affordable options.
The recent proposition considers a reduced 15% import tax for EVs, subject to an agreed-upon volume of at least 12,000 vehicles annually. Should this proposal come to fruition, Tesla is purportedly willing to invest $500 million in India. If the import volume increases to 30,000 vehicles, Tesla might escalate its investment to $2 billion.
While official comments from the concerned parties are yet to be disclosed, unofficial sources suggest that the Indian government is actively reviewing the proposal.
The nature of Tesla's prospective factory in India remains uncertain. With a proposed investment of $2 billion, it falls short of funding a large-scale electric car plant comparable to those in Shanghai, Germany, or Texas. The facility might potentially serve as a final assembly site or focus on the production of specific components.
The proposed 15% import tax, if implemented, could extend to other manufacturers contemplating investments in India, potentially attracting more foreign investments in the country. Established Indian EV manufacturers such as Tata Motors and Mahindra and Mahindra may face heightened competition domestically in such a scenario.