Tesla is showing interest in battery factory project in India, report says

Tesla has yet to enter the Indian market, but now a new local media report suggests that Tesla is showing interest in a battery factory project in the country.

Back in 2016, CEO Elon Musk said that Tesla had plans to enter the Indian market, but those plans have been delayed.

Jay Vijayan, who was then Tesla’s Chief Information Officer and was born in India, went to the country to investigate the possibility of Tesla starting to import cars in India.

After that, there was some confusion over Tesla’s ability to even import its vehicles in India in 2016.

At the time, Musk expressed concerns about local regulations forcing foreign retailers to source 30% of their parts locally that could prevent a launch.

The commerce and industry ministry responded to Musk telling him that he was wrong, but they actually assumed that Tesla would open a factory in India in order to sell cars in the country, but like almost all markets outside the US, Tesla first planned to import vehicles.

Earlier this month, Musk again said that it was an issue for Tesla to enter the market:

I’m told import duties are extremely high (up to 100%), even for electric cars. This would make our cars unaffordable.

— Elon Musk (@elonmusk) August 1, 2019

Foreign automakers need to have a local factory in India to reduce the extremely high import duties on foreign cars.

Musk seemed unwilling to build a Tesla factory in India before they can start importing cars, but he did say that there’s some hope:

For other countries, we pay in part for the local factory by selling cars there ahead of time. Also, gives a sense of demand. Current rules in India prevent that, but recent changes in sales tax give hope for future changes.

— Elon Musk (@elonmusk) August 1, 2019

A few weeks later, we’ve now learned that Tesla, and other electric automakers and battery manufacturers, have shown interest in participating in a government project to finance several battery factories in the country.

Indian financial daily newspaper Mint reported:

“Tesla and China’s Contemporary Amperex Technology Co. Ltd (CATL) are among the companies that have shown an initial interest in the Indian government’s plan to build large factories to make lithium-ion batteries at an investment of about ₹50,000 crore.”

₹50,000 crore is valued at around $7 billion USD and the government reportedly aims to build six large factories capable of multi-gigawatt-hours of annual li-ion battery output, like Tesla Gigafactory 1 in Nevada.

BYD is also amongst the company interested in the project according to the report, but none of them commented on it.

Electrek’s Take

I’d take this report with a grain of salt until we have more details.

However, Tesla has not been shy about stating that it will need a lot of battery factories in the long term and yet, there haven’t been many announcements since the launch of Gigafactory 1. That was six years ago.

At the time, Tesla said that several other factories would follow and Elon even said that all of Tesla’s future factories will include both car and battery production.

This hasn’t materialized so far. Even Tesla’s Gigafactory 3 in China isn’t planning on making its batteries for the moment and will rely on other manufacturers.

That said, we have been hearing rumors about other projects, including a battery factory in Indonesia.

Recently, Tesla all but confirmed that it plans to make own battery cells in the near future and we expect them to announce a new factory to support those plans.

Will that factory be in India? I doubt it, but I wouldn’t be surprised if Tesla eventually deploys some manufacturing capacity in the market.