16 July 2023

Tesla to make cars from Rs 20 lakh in India

Tesla has started discussions with the Indian government to set up an electric vehicle (EV) factory in the country, where Elon Musk’s company plans to make budget electric cars priced from Rs 20 lakh (Rs 2 million or $24,400) onwards.

The manufacturing unit is slated to have a yearly capacity of making 5 lakh or 500,000 cars, and a deal to this effect was planned during Indian Prime Minister Narendra Modi’s recent visit to the US, where he met American billionaire Musk.

Tesla to make cars from Rs 20 lakh in India
Model Y is the highest-selling Tesla car.

Even though such a plan is being charted, Tesla has remained tight-lipped about the development and has not come out with any major announcement to the media.


Tesla also eyes exports from India

Musk’s company, besides making cars for the huge and untapped Indian market, also plans to export these cheaper versions to countries, especially in South Asia, Southeast Asia and Africa.

In his talks with Musk, the Prime Minister urged him to make a significant amount of investment in the country to set up a manufacturing base.
 

Tesla’s earlier India plan

Earlier, Musk’s company wanted to bring Tesla cars to India as completely-knocked down (CKD) units from China.

This would have kept the prices of Tesla cars very high in India. Musk also sought tax concessions for Importing the cars in order to lower their prices but the Indian government did not agree to his proposal.

This is because it would help the American EV giant’s China unit, which would have made profit from the vast Indian car market.

So, the Indian government, while refusing to give any tax sops, asked Tesla to set up a manufacturing unit in India, which the auto major had earlier refused.


Tesla Model 2 hatchback plan

Recently, there was buzz that Tesla would launch its economic car Model 2 (which would be a hatchback) in some geographies, and maybe India could be the market from where Tesla’s first hatchback will debut.


China second-biggest market for Tesla

China is Tesla’s second-biggest market after North America and the Chinese market houses the EV giant’s biggest factory. Tesla’s highest selling cars currently are the Model Y and Model 3.


E-Vroooom’s views

While Tesla would get access to the world’s fastest-growing market, India could also position itself as a hub for manufacturing the world’s most-iconic EVs.

After Tesla comes to India, it would slowly increase its localisation from the initial, say around 30 per cent, to maybe 90 per cent, in a few years, and this could pave the way for even cheaper Tesla cars.

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