Elon Musk is rumored to be going to India this month, which is sparking speculation of an announcement about building a Tesla factory in the country.
Tesla has been trying to get into the Indian automotive market for years, but it wasn’t able to find a way around the country’s protectionist effort, which includes high import duties on vehicles being imported.
The Indian government wanted Tesla to build a factory in the country, but the automaker preferred to first establish a market in the country through imported vehicles before investing in a manufacturing facility in the country.
Last month, we reported that India finally came up with a compromise on its import duties on cars to open the door for Tesla and other EV automakers to launch in the country.
The deal involves greatly reducing import duties for a limited number of electric vehicles as long as the automaker makes a significant investment and commitment to build an electric vehicle factory in India.
Last week, we heard rumors that Tesla was planning to bring a scouting team to find a factory location in the country.
Now, a new report from Reuters in India claims that Musk is going to visit Prime Minister Narendra Modi later this month and that there will be a Tesla factory announcement during the visit:
Tesla chief Elon Musk will visit India this month to meet Prime Minister Narendra Modi and is expected to make an announcement on plans to invest and open a new factory in the country, two sources with direct knowledge said.
The visit is reportedly happen the week of April 22 in New Delhi.
When asked about Tesla’s plans for India this week, Musk said that it is a “natural progression” for Tesla to enter the Indian auto market.
Top comment by Adrian Monk
Looks like India is slashing import duty/Tax from 100% to 15% above $35K for 8K vehicles for 5 years.
For Tesla with average fleet price of $45K, tax break will be: 0.85*$45K*8K ~ $306 million every year for 5 years
1) A tax break of $1.5B in exchange for a $500M local EV manufacturing facility:
2) For comparision: Giga Berlin is about $5.5B with 500K/year production
3) At 20% gross profit on the imported vehicles will be about $360M with about $1.8B in revenue over 5 years than otherwise with the new policy
4) As a geo political risk hedging for china/taiwan: A 50K/year production line with a net $150M investment seems like no brainer
Effectively, Tesla India a few years down the line will be 50K/year production line, getting a foot hold in India, serving some export markets and acting as a geo-political hedge for about net $150M in investment
To take advantage of the new program that slashes import duties on upt to 40,000 imported electric vehicles, Tesla will need to make a minimum investment of Rs 4150 Cr (~$500 million USD) into an EV manufacturing facility in India within 3 years with a localization level of 25% by the 3rd year and 50% by the 5th year.
Electrek’s Take
This is an unconfirmed report, but it does look like Tesla India is happening. What I find interesting is that if an announcement is indeed happening soon, does it mean anything for Gigafactory Mexico.
The project has been delayed, and Musk basically said that Tesla is waiting to see how the economy goes.
It would be strange for Tesla to start a new Gigafactory project when it has one on pause – although Gigafactory India would serve different markets than Gigafactory Mexico.
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