Since this year, Tesla has been trying to test the waters in the Indian market. While India initially insisted on having a manufacturing plant, Elon Musk was not sure about Tesla being in the country. On the other hand, Tesla already had Giga Shanghai and upcoming Giga Berlin to easily supply cars to the country. But Manufacturing in India at the available resources and low labor costs, Tesla could potentially benefit. However, not until the government officials started to consider lowering the import tax, Elon Musk started to consider the manufacturing plant option. According to Soumen Mandal, an analyst at Counterpoint Research stated the Tesla plans to finalize the manufacturing plans by 2022.
According to Mandal, India is one of the largest beneficiaries of the EV movement globally. As Tesla sets up manufacturing plant here, the company would be tapping the early movement and would be deciding the success of the company in the country. As per the report from Economic Times of India, Mandal stated, “None of the big automakers wants to leave out the opportunity to acquire a share in the India market. Tesla is not an exception in this case. The cheap availability of resources and low labor cost will allow Tesla as well as other automakers to earn a higher profit if they set up local manufacturing or assembly plant.”
Game of chess with the officials
For months, the company was spared with the country’s government officials. Though initially, they entered with the thought of setting up a manufacturing plant, later Elon Musk backtracked. However, Musk was testing the demand in the country by trying to negotiate to lower the import tax.
The government officials were first strong about not lowering the import tax. However, it would be a too rare opportunity for the country to lose the major EV player to enter the Indian market. Tesla was able to survive despite the semiconductor shortage. It is already known that Tesla is considering Russia for its next manufacturing plant.
So the import tax push from Tesla is now being reconsidered by officials. Where one Indian official said, “We haven’t firmed up the reduction in duties yet but there are discussions that are ongoing.” However, Mandal strongly believes that Tesla and India will work it out as it is too good of an opportunity to pass up. As stated by Mandal as “Hence the desire to earn more profit as well as wish to acquire a market share in one of the to-be largest auto markets is bringing Tesla to India.”