Tesla Holds Talks With Indian Officials On Incentives For Car, Battery Manufacturing

US-based electric vehicles (EV) behemoth Tesla reportedly held discussions with Indian officials about incentives offered by the government for car and battery manufacturing.

Earlier this week, it was reported that the carmaker proposed setting up a manufacturing facility in India during the meeting of its executives with top officials of the Indian government, including some from the Prime Minister’s Office.

The carmaker is also in talks to manufacture EV batteries locally, Reuters reported.

Citing a source, the report said Tesla is testing the waters in India and trying to understand the local policies.

While the government has been tight-lipped about the visit of Tesla executives, it is understood that representatives of the EV maker met Minister of State for Electronics and IT Rajeev Chandrasekhar on Thursday (May 18).

The Tesla delegation also included Karn Budhiraj, a senior supply chain executive at the US-based EV maker. Budhiraj’s presence may indicate Tesla’s willingness to incorporate India into its larger supply chain.

The carmaker currently has factories in Canada, China, Germany, Mexico, The Netherlands and the US.

The discussions in India represent a shift in the stance of the US-based electric car company.

While Tesla has been demanding a cut in import duties on cars for a long time, the talks on the matter have been stalled as the government has refused to give any concessions before the company invests in India.

Last year, Tesla CEO Elon Musk also criticised the Indian government for high duty on imported EVs. “Tesla will not put a manufacturing plant in any location where we are not allowed first to sell and service cars,” he said. 

However, the company seems to have taken a U-turn and changed its position now. As per the Reuters report, its recent discussions with Indian officials focussed less on imported vehicles and more on how Tesla could benefit from government schemes.

These may include the FAME-II scheme and India’s production-linked incentive (PLI) scheme on advanced cell chemistry battery manufacturing. India has set aside nearly $6 Bn to incentivise local EV production between the two.

Besides, the Centre also has a PLI scheme for the automobile and auto component industry to promote domestic manufacturing.

Tesla might find a potentially game-changing market in India, as the goals of the carmaker and the government align. The EV maker has set a goal of selling 20 Mn EVs per year by 2030, while India is the world’s third-largest automobile market.

Further, the Indian government has set an ambitious target of EVs accounting for 30% of India’s total car sales by 2030 from around 1% today.

The visit of Tesla executives to India also comes ahead of Prime Minister Narendra Modi’s visit to the US in June this year.