A Model Y electric car is photographed during the start of production at Tesla's “Gigafactory” on March 22, 2022 in Gruenheide, southeast of Berlin. Leading American electric car manufacturer Tesla received the green light to establish its “megafactory” in Germany on March 4, 2022, paving the way for production to begin shortly after an approval process marred by delays and setbacks. (Photo by Patrick Pliol/Pool/AFP) (Photo by Patrick Pliol/Pool/AFP via Getty Images)
Patrick Bliol | AFP | Getty Images
Tesla India will explore sites in India this month to set up an electric vehicle factory with an investment of up to $3 billion, according to a Financial Times report, in a boost to Prime Minister Narendra Modi's plans to boost domestic manufacturing.
The Financial Times reported on Wednesday, citing two people familiar with the plans, that the value of the plant could range between two and three billion dollars.
The electric car maker will focus on the states of Maharashtra, Gujarat and Tamil Nadu that already have auto hubs, according to the report.
Tesla did not immediately respond to CNBC's request for comment.
India last month reduced import tariffs on some electric vehicles for automakers willing to invest at least $500 million and start local manufacturing in the country within three years.
“The Government of India has approved a plan to promote India as a manufacturing destination so that e-vehicles can be manufactured with latest technology in the country,” the government said last month.
Modi met Elon Musk, CEO of Tesla, in June, and invited him to explore investment opportunities in India in the field of electric cars.
In 2021, India approved a production-linked incentive scheme for cars and their components with a budget of Rs 25,938 crore ($3.1 billion) for five years, as part of the government's efforts to boost domestic production and reduce dependence on imports. The scheme was extended for a year on January 1.
“Tesla is the most attractive EV maker for India because of its strong appetite to invest in global expansion appetite and its ability to develop EV production ecosystems,” Canalys analyst Ashwin Amberkar said earlier this month.
“India's new electric vehicle policy offers increased incentives, making it a prime opportunity for Tesla to establish a strong position in the country,” Amberkar said.
Tesla is engaged in fierce competition with the Chinese company BYD, which overtook the American electric car giant in the last quarter of 2023 as the largest electric car maker in the world, as it sold more battery-powered cars than Tesla. However, in the first quarter of 2024, BYD's sales fell below Tesla's.
China's electric vehicle market accounts for nearly 60% of worldwide electric vehicle sales. Brands from BYD to Xpeng to Xiaomi are heating up the market with price wars and new model launches.