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Home » Electric Vehicle News » Tesla Hunts for Indian Home: Which Indian State Wins the $3 Billion EV Prize?

Tesla Hunts for Indian Home: Which Indian State Wins the $3 Billion EV Prize?

Image of Elon Musk while setting up a EV factory in India

Tesla is aggressively looking for locations to set up its EV factory in India, at a time when the nation is witnessing a major shift in the mobility pattern. With a proposed Investment budget of $3 billion for the Tesla EV factory, Tesla has ignited a bidding war among Indian states, each wanting to be the future manufacturing home of the electric vehicle giant Tesla.

Several Indian states are ready to welcome Tesla by offering a combination of financial and infrastructural benefits. From established industrial hubs like Maharashtra to states with strong port infrastructure like Gujarat, and existing automotive powerhouses like Tamil Nadu, each state has its own strengths to offer Tesla. Haryana, home to the country’s largest car market, could also tempt Tesla to cater to the immediate domestic demand of electric vehicles.

Tesla’s interest in launching its EV models in India isn’t new. Talks between the company and the Indian Ministry of Heavy Industries have been ongoing for nearly a year. In 2021, Tesla requested for lower import duties on its high-end electric vehicles. However, the Indian government resisted the request and focussed primarily on the domestic manufacturing of electric vehicles, rather than import.

Policy Game Changer

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The announcement of India’s new EV import policy for 2024 has significantly altered the EV landscape, paving Tesla’s way to India. This policy offers significant reductions in import duties on electric vehicles under the condition that the company invests Rs 37,000 crores in India and sets up a manufacturing plant within 3 years. These friendly import duties make India a lucrative manufacturing hub for Tesla.

Growing EV Ecosystem

The growth of EV adoption in India and increasing interest in sustainable transportation presents India as a goldmine for Tesla. There’s also a growing awareness about protecting the environment among Indian youths, making electric cars more appealing to Indian consumers. This surge in demand for EVs in India is evidenced by the record-high sales of 208,000 units of electric vehicles in March 2024. The Indian government’s push for electric vehicle adoption, with friendly incentives and tax breaks for EV manufacturers, further sweetens the deal for Tesla.

Despite the financial incentives, Tesla is looking for a state with a reliable power grid that utilizes renewable energy sources like solar or wind power to align with their focus on environment-friendly transportation. Tesla is currently on the lookout for a state with a workforce skilled in EV technology along with supportive government for necessary permits to avail the central EV subsidies.

Along with setting up a factory, Tesla’s entry into India could be a potential game-changer for the Indian EV industry. It is likely to attract other major EV players around the globe to come and manufacture in India. This will accelerate India’s transition towards a cleaner and more sustainable mode of transport.

While the exact location of Tesla’s new factory remains undisclosed, one thing is certain that each Indian state will offer the most compelling proposition for Tesla.

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Founder at Ecogears
Abhishek Gautam is the founder at ecogears ev ecosystems. He mainly covers electric vehicles, government updates related to EVs, EV charging and Tesla accessories.
Abhishek Gautam
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