Tesla Eyeing New Factory in India

Back in May 2022, American EV automaker Tesla Motors halted its plan to enter the Indian market following discussions with the Indian government. The brand wanted to have CBU import taxes reduced for its cars, a request which was declined by the Central Government. Now, after a year, a recent report suggests that the company has reinitiated talks to enter 
our market. We take a closer look.

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Tesla Motors in talks with Indian government for local manufacturing

As per the news report, Tesla has started talks with the Indian government to enter the Indian car market again. This time, the brand is also open to the idea of opening a new manufacturing facility in the country to make Tesla cars for the domestic market as well as for exports. There were talks about which models could be locally manufactured in the country and also the possibility of setting up a battery manufacturing plant in the near future.

Company’s second attempt into entering Indian auto market

In early 2021, Tesla had formally registered its office in India as Tesla Motors India & Energy Pvt Ltd. The company was supposed to initially start operations with a R&D center. Union Transport Minister Nitin Gadkari had also confirmed that Tesla deliveries would start by 2021.

Tesla initially wanted to enter the Indian market with CBU (Completely Built Unit) imports. But since the government refused to decrease the import taxes, which can be as much as 100 percent on CBUs worth over $40,000 (approx. Rs 33 lakh), the automaker started to look for different solutions. However, due to the breakdown in negotiations between the automaker and the government, we are yet to see it enter the Indian auto market.

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Local production to help reduce model costs for the company

If Tesla goes ahead with the plan to locally produce its models, it will be a big win for Indian buyers. CKD (Completely Knocked Down) units face much lower taxes than direct CBU imports. Furthermore, with the government’s ‘Make-in-India’ initiative, the manufacturer could avail the local PLI (Production Linked Incentive) scheme, which proposes various financial incentives.

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