The talks regarding Tesla aiming to set up its Gigafactory in India have been reinitiated as Senior Tesla Executives are in the country to discuss the matter with the government bodies.
The plans of a Tesla Gigafactory in India have been reignited by the American auto giant after they were abandoned last year. Tesla is the largest EV maker in the world. It has established a huge market share for itself in the US, China and Europe. Lately, it is amidst the process of a global expansion targeting the top developing nations. Resultantly, countries in Europe and South-East Asia are on its radar. Hence, setting up a Gigafactory in a place like India could serve as a great channel to tap into the Indian market, as well as commence exports to the regions nearby.
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Tesla Gigafactory in India
There was a huge buzz around Tesla setting up its factory in India last year and the team was out to search for a suitable location too. In fact, Bengaluru was touted as the region for the manufacturing plant to be set up. However, these proceedings were abandoned because Tesla and the Indian Government were not able to reach an agreement. Tesla wanted to test the market by importing EVs from the USA or China. But the Indian government didn’t want Chinese-made EVs here.
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For that, Tesla demanded that the government reduces its import duties which stand at over 100% at the moment for cars above $40,000. But the Govt stood its ground and declared that it won’t make company-specific policies. In fact, they offered to do so if Elon Musk could guarantee that he will set up the manufacturing plant in India for domestic, as well as export purposes. That would have boosted the Govt’s ‘Make in India’ initiative. But the top Tesla Executives are again in the country to discuss this matter. It looks like Elon Musk might have finally agreed to the terms of the country.
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Possible Reason for this Agreement
With the ever-increasing number of new EV makers, particularly from China, Tesla is certainly feeling the pressure. In fact, that is the reason why it offered so many price cuts during the first quarter of this year (2023). It understands that in order to reduce its dependence on China, it needs another big economy like India for cheap manufacturing and great global ties and trade exports. Also, the mass adoption of EVs in India and South-East Asia is quite rapid. Hence, Tesla understands that it stands to benefit immensely if it is able to set up a production facility here soon. That could be the reason for reigniting dialogue now.