India to get Made in Germany Teslas: Reports

The Company currently manufactures the Model Y at its Berlin factory. The move signals the electric car giant’s potential entry into the Indian market, the world’s third-largest car market.

Elon Musk-owned Tesla has initiated the production of right-hand drive (RHD) cars for the Indian market at its Giga Berlin facility, as stated in various news reports. The company plans to introduce these cars on the Indian roads by later this year. This move signals the electric car giant’s potential entry into the Indian market, the world’s third-largest car market.

Exploring Sites for Local Manufacturing Plant in India

As per the reports, a team from Tesla is scheduled to visit India to explore potential sites for a local car manufacturing plant. This venture would require an estimated investment of around $2 billion, as indicated by “two individuals familiar with the matter”.

Indian Government’s Tax Incentive

India recently reduced the import tax rate on certain electric vehicles, provided the manufacturers invest at least $500 million in the country and commence production within three years. This development favors Tesla, which had been advocating for lower taxes.

Initiation of Right-Hand Drive Car Production

According to these news sources, Tesla has commenced the production of right-hand drive cars earmarked for the Indian market. Some of these cars are expected to be shipped to India by the end of this year (2024).  However, it remains unclear which model Tesla plans to export to India, as the company currently manufactures only the Model Y at its Berlin factory.

Tesla’s Strategic Moves in India

Tesla’s entry plan into India includes not only the investment in a manufacturing plant but also the establishment of a charging network. According to the media reports, Tesla’s investment in a charging network will come on top of the $2 billion earmarked for the plant. Additionally, the company aims to increase sourcing of components locally, with a shift away from reliance on Chinese suppliers.

According to the news reports, Tesla is reportedly considering various states in India, including Tamil Nadu, Maharashtra, and Gujarat, as potential locations for its factory. The company aims to complete the construction within two years.

The carmaker is believed to be optimistic about its prospects in India and has been eyeing the Indian market for years. The company’s officials visited the country several times over the past year. Tesla’s CEO Elon Musk also met Prime Minister Narendra Modi in New York last June. 

Tesla’s foray into the Indian market coincides with a slowdown in electric vehicle demand in its primary markets of the United States and China, coupled with heightened competition from Chinese electric car manufacturers. 

Overview of India’s EV Market

India’s electric vehicle market, although relatively small, is witnessing steady growth. Currently, dominated by domestic carmaker Tata Motors, electric vehicles accounted for 2% of total car sales in 2023, with the government targeting a 30% market share by 2030.

In a competitive move, VinFast, Tesla’s Vietnamese rival, has agreed to invest $2 billion in India and has already commenced the construction of an electric vehicle factory in Tamil Nadu.