New Delhi May 19 2023: A delegation of Tesla Inc. executives to India discussed the possible local sourcing of components and incentives but stopped short of proposing to build vehicles in the country, people familiar with the matter said, after the electric carmaker reopened dialog with the government after a year-long impasse.
While the automaker will eventually look to establish a domestic factory to tap India’s vast consumer market, it hasn’t yet presented a formal plan, the people said, asking not to be identified because the matter is private. The executives reiterated their concern about India’s high tariffs on imported cars during this week’s meeting, but the government doesn’t plan to change its tax regime to accommodate one automaker, one of the people said.
Tesla didn’t immediately respond to an email seeking comment outside of normal US hours. A representative for the ministry of road transport and highways also didn’t immediately respond to a request for comment.
Rising geopolitical tensions between China and the US mean global companies are increasingly seeking an alternative base for manufacturing and supply chains. India is emerging as an attractive bet for international companies amid growing demand for products ranging from smartphones to electric vehicles in the world’s most-populous nation.
Discussions between Tesla and India reached a stalemate last year after Prime Minister Narendra Modi’s administration insisted it sell locally-made cars, while the automaker wanted to first import them at lower taxes to gauge demand. India didn’t want Tesla to bring cars into the country from its Shanghai factory.
Tesla is focusing on getting a strong grasp of local policies and incentives for the EV industry before firming up a roadmap for India, the people familiar said. Tesla is having a series of meetings with ministries of power, road transport and highways, and heavy industries.
The US automaker has made overtures to other Asian nations about opening a factory. In November, Chief Executive Officer Elon Musk said he considers South Korea a top candidate for investment, according to the office of President Yoon Suk Yeol. Musk said he would make any investment decision after a comprehensive review of investment conditions, including around manpower and technology.
In January, Bloomberg reported Tesla is close to a preliminary deal to set up a factory in Indonesia that would produce as many as 1 million cars a year.