India Inches Closer To Seal Deal With Tesla To Import EVs, Set Up Factory: Report

India is gradually inching closer to seal a deal with US-based EV maker Tesla Inc. that would allow the company to ship its vehicles to the country from next year and set up a factory within two years, citing sources privy to the development, Bloomberg reported. According to the report, an announcement could come at the Vibrant Gujarat Global Summit in January, a source told the news agency. Gujarat, Maharashtra, and Tamil Nadu are under the radar as they already have well-established ecosystems for electric vehicles and exports, another person said.

Elon Musk-owned electric carmaker would commit an initial minimum investment in any plant of around $2 billion and would look to increase purchases of auto parts from India to as much as $15 billion, one of the sources said, while adding Tesla would also seek to make some batteries in India to bring down costs. However, no final call has been made and the plans could also change, as per sources.

Musk, Tesla’s CEO, in June had said that the firm plans to make a “significant investment” in India and he intends to visit in 2024. Representatives from India’s Ministry of Heavy Industries, which oversees the automobile sector, and the ministries of finance, and commerce and industry, didn’t respond to Bloomberg’s requests for comment.

Launching Tesla in the Indian market would be a boon for the car company, which currently has factories in the US, China, and Germany. The Centre has been pushing to increase domestic manufacturing of EVs and encourage a more rapid adoption of cleaner transport.

Despite those efforts, India’s EV market hasn’t taken off, with battery-powered cars accounting for just 1.3 per cent of the total passenger vehicles sold last year, according to BloombergNEF. Buyers are hesitant to make the switch due to electric cars’ high upfront cost and a dearth of charging stations.

Trade Minister Piyush Goyal, who visited Tesla’s plant in Fremont, California earlier this month, said in September that Tesla is planning to almost double purchases of auto parts from India to $1.9 billion this year. The electric carmaker sourced parts worth $1 billion from the nation last year, he said at an event in New Delhi at the time.