Electric car maker Tesla, led by Elon Musk, has reportedly started discussions with the Indian government around an investment to establish a car factory in the country.
What Happened? The factory will have an annual capacity of up to 5 lakh electric vehicles, with prices starting from ₹20 lakh, government sources told the Times of India. They added that Tesla was also considering using India as an export base, intending to ship cars to countries in the Indo-Pacific region.
The turnaround in Tesla’s investment plans comes shortly after Elon Musk’s meeting with Prime Minister Narendra Modi during the latter’s visit to the United States last month. Musk expressed admiration for Modi and said he had encouraged him to invest in India.
Sources told the daily that Tesla has presented an ambitious plan to the Indian government, encompassing both local manufacturing and exports. The commerce and industry ministry is leading the discussions, aiming to strike a mutually beneficial agreement that ensures a level playing field, they added.
It was previously reported that Tesla was talking to the Indian government about bringing its own auto parts and electronics supply chain to India and seeking clarity on incentives and tax breaks.
Get Ring The Bell, Benzinga India’s weekly briefing. Designed specifically for investors like you.
Tesla had reestablished communication channels with the Indian government in May, with a team from the company visiting India a month ahead of Modi’s visit to the US. Tesla’s potential investment in India is part of a global strategy adopted by companies to diversify their production bases beyond China, although Musk remains optimistic about China’s manufacturing capabilities.
If the proposal is approved, it would significantly bolster the Indian government’s “Make in India” initiative. This initiative has already witnessed significant investments from Apple’s vendors, who have established domestic production and utilized India as a base for exports.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.