Elon Musk’s Tesla to Build an EV Plant in India

By Avi Ben Ezra | Monday, 15 February 2021 | Business, Tech, International

Tesla is nearing a deal to start manufacturing electric vehicles (EV) in India, marking another expansion move after setting up a plant in China.

Expanding Into India

The US-based EV business is reportedly looking to build a plant in Karnataka, a southern state in India, according to the announcement by the state’s chief minister. The company has been holding negotiations with state officials for six months now and is now close to agreeing to a deal.

The EV business is reportedly doing due diligence for office real estate in the region and is initially looking to build a research and development (R&D) facility, according to a Bloomberg report. The EV company prefers Bangalore because it’s becoming a hub for EVs and aerospace manufacturing talent.

On January 13, Tesla’s CEO Elon Musk confirmed that the EV business is coming to India as it looks to open an office, showrooms, an R&D center, and potentially build a plant. The company has also incorporated its Indian division and registered offices in downtown Bangalore.

However, entering India might prove difficult for the company as the country’s electric vehicle market is not as developed as in China, where Tesla is the number one EV maker.

The high prices of their electric car models could also present challenges for the carmaker. It is estimated that electric vehicles represent around 5% of China’s annual car sales, while in India, electric cars account for less than 1%.

“Considering the price of a Tesla, Elon Musk probably won’t be able to sell an EV to most of the population in emerging economies,” said Pedro Pacheco, a senior research director at Gartner Inc.

“However, looking at the size of the population and the potential for economic growth, Tesla will probably target a fast-growing group of affluent individuals that, in absolute terms, compares quite favorably to what we see in many developed countries.”

He also said that the car business could decide to use its plant in India as an export base and leverage a number of markets simultaneously.

Basudeb Banerjee, an analyst at Ambit Capital Pvt, pointed out that the “size of the luxury car market in India is minuscule with brands like BMW, Mercedes, Audi and Jaguar Land Rover accounting for just 30,000 to 50,000 sales annually.”

Summary

The EV business giant Tesla is negotiating with India’s officials to build a plant in the suburbs of Bangalore, its second factory outside of the United States (US).

About the Author

Avi Ben Ezra

Avi Ben Ezra is the CTO and Co-founder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.