Tesla’s Ambitious Moves in India: Potential Factory Setup and New Car Development for Developing Nations

In a groundbreaking move, Tesla is reportedly in advanced discussions to enter the Indian market, contemplating an unprecedented investment of nearly $30 billion over the next five years. As India progresses towards shaping a comprehensive electric vehicles (EV) policy, Tesla is actively engaged in talks, expressing openness to commit substantial funds directly and indirectly.

Insiders closely associated with Tesla’s official business plans have disclosed potential components of this transformative investment. The proposed commitments may encompass a direct and immediate infusion of $3 billion to establish manufacturing capabilities for a new small car tailored for the wider developing world. In addition, Tesla is exploring a $10 billion commitment from other partners to support this ambitious manufacturing venture. Furthermore, there is contemplation of a cumulative investment of $15 billion in the battery industry ecosystem over the next five years.

The success of these plans hinges on the alignment of the new EV policy, which is not specific to Tesla but a broader initiative. If the policy addresses Tesla’s request for a rebate in the existing structure of import duty for foreign-made EVs, the company envisions bringing a limited number of its standard brands to compete in the Indian luxury car market. Simultaneously, Tesla plans to initiate the development and testing of a charging ecosystem in the country.

A prospective investment in a factory in India is also on the horizon, with Tesla aiming to roll out the first small car within two years and complete the facility within three years. While the pricing structure for the new model is yet to be determined, it is expected to be a more affordable option compared to Tesla’s traditional offerings, catering to the demands of countries in Asia, Africa, and Latin America. The proposed factory, designed with a high degree of locally manufactured content, may serve both the Indian market and primarily focus on exports.

“If it works out, this will be the biggest foreign direct investment commitment in India. Tesla will invest $3 billion in the plant, and other partners in its manufacturing ecosystem will invest another $10 billion. In parallel, there will be another $5 billion investment in batteries that will grow to $15 billion. We are looking at a total of $30 billion,” stated a source closely involved in the discussions.

Comparisons have been drawn to a potential “Suzuki moment” for India’s EV industry, reminiscent of Maruti-Suzuki’s impact on the small car revolution in the 1980s. Additionally, the prospect is hailed as an “Apple plus moment” for India’s manufacturing aspirations, considering Tesla’s comprehensive approach that transcends being just an auto company. Described as a tech company with involvement in critical minerals mining, refining, semiconductor production, and design, Tesla is seen as a catalyst that could usher in a significant spillover effect across various industries.

The unfolding scenario positions Tesla not merely as a player in the automotive sector but as a transformative force capable of reshaping India’s electric mobility landscape and contributing significantly to the country’s manufacturing ecosystem. The anticipated investment represents a major milestone, potentially making Tesla a key player in India’s quest for sustainable and innovative transportation solutions.