Tesla submits new factory proposal to Indian government: report

Tesla executives proposed setting up a new factory in India at a May 17 meeting with local government officials, according to Reuters.

Despite numerous setbacks in the past, Tesla has not given up on plans to enter the Indian market. Fortunately, the impasse between Tesla and the Indian government may be about to end.

The electric vehicle maker has reportedly proposed setting up a factory in the world’s most populous country for domestic sales and exports. According to a source with direct knowledge of the matter cited by Reutersthe American company has communicated the proposal to Indian government officials on May 17.

Tesla’s proposal comes after India refused to accept the company’s request in 2022 to reduce the car import tax, which can be as high as 100 percent.

At the time, the South Asian country wanted Tesla to build the vehicles locally, while Tesla wanted to test the market first with imports. The talks ended in a stalemate, but it appears that negotiations have now resumed.

The unnamed source said Tesla proposed setting up a new factory to Indian officials, though did not specify a location or investment. Tesla did not discuss lower import taxes with Indian government officials, the source added.

Gallery: Tesla Model 3 2022

On May 16, Reuters reported that top Tesla executives are in India this week to meet with the government to discuss local sourcing of parts and other issues. Tesla representatives met with officials from Indian Prime Minister Narendra Modi’s office and other ministries on May 17, the source and another source familiar with the matter said.

The meeting comes weeks before Modi’s planned visit to the United States in June. Building cars in India aligns with the prime minister’s pitch to attract foreign companies with his “Made in India” campaign, especially as automakers seek to reduce their reliance on China by diversifying their supply chains.

In 2021, India promised to offer Tesla lower manufacturing costs in China, where Tesla builds the Model 3 sedan and Model Y crossover for the local market and for export to global markets.

India is the largest car market that Tesla has yet to enter. However, electric vehicles have yet to take over the local sales charts. Sales of electric passenger vehicles in India last year topped 41,000 units, a small fraction of the total 3.8 million passenger vehicle sales in the market.

Tesla had hired a local team in India by 2021 and also started looking for showroom space, but it was abandoned last year. In 2016, when pre-orders for the Model 3 began, Tesla started taking refundable deposits of $1,000 from Indian customers. According to an April 2022 report by The Indian Expresssome of the customers were still waiting for refunds.