Elon Musk's Tesla Nears Pact with Indian Government, January Reveal

India is edging toward finalizing an arrangement with Tesla Inc. to introduce its electric vehicles to the country and establish a manufacturing facility within two years, sources close to the Indian government have disclosed.

An announcement about this collaboration might be revealed at the Vibrant Gujarat Global Summit slated for January. States like Gujarat, Maharashtra, and Tamil Nadu, known for robust electric vehicle ecosystems and exports, are potential locations for Tesla's proposed factory.

Sources suggested that Tesla's initial investment in the plant could reach around $2 billion, with plans to elevate auto parts purchases from India to approximately $15 billion. Additionally, Tesla aims to manufacture batteries locally to reduce expenses.

However, these plans remain fluid, subject to change. Tesla's CEO, Elon Musk, previously indicated a substantial investment in India during a visit in 2024.

Official comments from India’s relevant ministries or Tesla are yet to surface. The move holds promise for Tesla's expansion, tapping into India's burgeoning electric vehicle market, driven by the rising interest of the middle-class demographic. The Indian government has been fostering local EV manufacturing and cleaner transportation.

Despite these initiatives, the EV market in India remains limited, constituting merely 1.3% of total passenger vehicle sales in the previous year, due to high initial costs and insufficient charging infrastructure.

Tesla's current vehicle imports face substantial tariffs, but locally produced models might be priced at a more accessible $20,000 upon launch. Tesla's engagement with India, after a stalemate, includes talks to bolster parts sourcing and potentially reduce import duties for international EV manufacturers.