PM Modi, Elon Musk to discuss Tesla's future in India

Tesla cars might soon be seen on Indian roads. This is because PM Narendra Modi is on an official visit to the United States, and is scheduled to meet Tesla CEO Elon Musk too. Experts believe that their meeting will be used to accelerate the EV maker's debut here. The brand has already agreed to assemble vehicles on our shores.

Tesla's history with India

Back in January 2021, Tesla registered its India branch and named it Tesla India Motors and Energy Pvt. Ltd. The Karnataka government requested the carmaker to start operations there in January 2022. However, the plans fell apart due to the Centre's insistence on manufacturing vehicles in the country. Finally, the brand exited the market in June of the same year.

Talks recommenced in May 2023

The Tesla-India connection was renewed in May this year when a group of senior Tesla executives visited New Delhi. The move was done to diversify the EV maker's operations beyond China. Reportedly, topics such as local sourcing of components and lower import taxes on EVs were discussed. However, the company did not guarantee setting up a manufacturing facility in the country.

What did the Centre say to Tesla?

Post the meeting in May, the Indian government informed Tesla that they could start operations by starting with the domestic assembly of EVs and later on setting up a vendor base. The Centre also said that "import concessions on the components" necessary for local assembly will be given till a vendor base is established. However, the firm will have to specify a time frame.

How did Tesla respond?

Earlier this month, Tesla reportedly agreed to the government's suggestion to assemble electric cars in India and also set up a vendor base. The location where the factory will be set up shall be announced by year-end. The company is not insistent on import duty cuts anymore. The frosty US-China relationship has forced the carmaker to rethink the future of its operations.

China houses Tesla's sole Asian factory

China is Tesla's biggest market outside North America and home to its sole manufacturing facility in Asia. Because of the US-China trade war, Beijing is subjecting American companies to intense scrutiny and threats of shutdown, leaving the EV maker in a precarious position. Thus a shift toward India is inevitable. Once local manufacturing starts, Tesla will have to relocate vendors from China to India.