Tesla plans to start by importing and selling its Model 3 electric sedan in India, according to sources.
New Delhi:
India is ready to provide incentives to ensure that Tesla Inc.’s production cost would be lower than in China if the carmaker pledges to make its electric vehicles in the country, Union Minister Nitin Gadkari told Reuters.
Gadkari’s land comes a few weeks after Tesla, billionaire Elon Musk, registered a company in India in a step towards entry into the country, possibly right in the middle of 2021. Sources familiar with the matter said Tesla intends to start by importing and selling its Model 3 electric sedan in India.
“Instead of assembling (the machines) in India, they should produce the entire product in the country by hiring local suppliers. Then we can make bigger concessions,” Gadkari said in an interview, without giving details about the incentives that would be offered. .
“The government will ensure that the production cost for Tesla will be the lowest compared to the world, even China, when they start manufacturing their cars in India. We will ensure this,” he said.
India wants to boost local production of electric vehicles (EVs), batteries and other components to reduce costly imports and reduce pollution in big cities.
This is happening amid a global race of carmakers to start production of electric vehicles while countries work to reduce carbon emissions.
But India faces a major challenge to win a production commitment from Tesla, which did not immediately respond to an email asking for comments on its plans in the country.
India’s innovative electric vehicle market accounted for only 5,000 of a total of 2.4 million cars sold in the country last year as a negligible charging infrastructure and the high cost of electric vehicles discouraged buyers.
In contrast, China, where Tesla already manufactures cars, sold 1.25 million new passenger vehicles, including electric vehicles, in 2020 out of a total sales of 20 million and accounted for more than a third of Tesla’s global sales.
India also does not have a comprehensive EV policy, such as China, the world’s largest car market, which requires companies to invest in the sector.
Gadkari said that in addition to being a large market, India could be an export hub, especially with about 80% of the components of lithium-ion batteries now manufactured locally.
“I think it’s a win-win situation for Tesla,” Gadkari said, adding that he also wants to engage with Tesla on building a high-speed hyperloop between Delhi and Mumbai.
India is developing a production-related incentive system for car and auto component manufacturers, as well as for the establishment of advanced battery manufacturing units, but details are not yet finalized.
Switching to cleaner energy sources and reducing vehicle pollution are seen as essential for India to meet its climate commitments in the Paris Agreement.
India last year introduced stricter emissions rules for carmakers to bring them up to international standards. He is now looking at tightening fuel efficiency rules in April 2022, which industry executives say could force some carmakers to add electric or hybrid vehicles to their portfolios.
Beaten by the COVID-19 pandemic, the industry says it needs more time to make the transition.
Gadkari said he was not directly responsible for making the decision on the delay, but was confident that India would meet its Paris treaty commitments without disrupting economic growth.
“Development and the environment will go hand in hand. It will take some time, but we will soon reach international standards,” he said.