Electric vehicle (EV) giant Tesla is reportedly scouting locations in India to set up a manufacturing facility, according to a Financial Times report. The potential plant is estimated to cost between $2 billion and $3 billion. The report, citing sources familiar with the plans, suggests Tesla is focusing on established automotive hubs in Maharashtra, Gujarat, and Tamil Nadu.
This development comes after the Indian government recently relaxed import tariffs on certain EVs for automakers willing to invest at least $500 million and establish domestic manufacturing within three years. This policy aims to attract global EV leaders and foster a robust domestic EV ecosystem.
“The government is actively promoting India as a manufacturing hub for EVs with the latest technology,” a government statement last month highlighted. Prime Minister Narendra Modi himself met with Tesla CEO Elon Musk in June 2023, extending an invitation to explore investment opportunities in India’s EV market.
In 2021, the government launched a production-linked incentive (PLI) scheme for automobiles and auto components, offering financial assistance to manufacturers who establish domestic production facilities. This five-year program, with a budget of $3.1 billion, aims to incentivize domestic production and reduce dependence on imported vehicles.
Tesla’s potential entry into the Indian market comes amidst fierce competition in the global EV space. China’s BYD recently surpassed Tesla as the world’s leading EV manufacturer in Q4 2023, though Tesla regained the top spot in Q1 2024. The Chinese EV market, accounting for nearly 60% of global EV sales, is a fierce battleground with domestic brands like BYD, Xpeng, and Xiaomi aggressively competing on price and launching new models.
Electric Vehicle Sales in India Surge in Fiscal 2024
The Indian electric vehicle (EV) market has clocked record-breaking sales in fiscal year 2024. With a staggering 41% increase compared to the previous year, a total of 1.66 million EVs were sold across the country.
March 2024 marked a solid month, setting a new record with over 197,000 units sold. This surge can be partly attributed to a pre-emptive buying spree before the expiry of the FAME-II subsidy scheme, which incentivized EV purchases. The government has since launched the Electric Mobility Promotion Scheme 2024, allocating Rs 500 crore to extend support for electric two-wheeler and three-wheeler purchases until July 2024.
According to the data compiled by the government’s Vahan website, from April 2023 to March 2024, India witnessed the purchase of 1,665,270 EVs, translating to an average of 4,562 electric vehicles sold every single day as compared to the daily average of 3,242 EVs sold in the previous fiscal.
Two-wheeler and three-wheeler segments dominated the EV market, accounting for a combined 94% of all EV sales in India. Electric two-wheeler sales captured 56% of the market share, showcasing a healthy 29% year-on-year growth. Three-wheelers registered a remarkable 57% growth and constituted 38% of all EV sales.
Sales figures for cars and SUVs jumped by a significant 89% compared to the previous year, reaching a total of 90,033 units sold.
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