Tesla looks to send a scouting team to India this month to explore locations for a potential electric car manufacturing plant, with investments estimated between $2 billion and $3 billion, revealed two individuals with direct knowledge of the company’s plans, according to the Financial Times.
This move aligns with India’s recent policy adjustments aimed at attracting electric vehicle (EV) manufacturers, including reduced tariffs on imported EVs for firms that commit to domestic production within a three-year timeframe.
The scouting team from the U.S. is expected to evaluate potential sites by late April, with a focus on states known for their automotive hubs, such as Maharashtra, Gujarat, and Tamil Nadu. These regions are preferred for their port facilities, which would facilitate Tesla’s car exports.
The venture, if confirmed, is poised to significantly boost Prime Minister Narendra Modi’s government, especially in light of the upcoming general election where the administration’s track record on business and employment will be scrutinized. Modi, who met Tesla CEO Elon Musk during a visit to the US last year, has been a vocal proponent of Musk investing in India.
Tesla has indicated to Indian officials the possibility of producing a smaller, more affordable car in the new facility, with a target price under $30,000. This model could cater not only to the Indian market but also be exported across Southeast Asia, the Gulf, Africa, and parts of Europe.
Despite Tesla’s global expansion efforts, including a new plant in Mexico slated for operation in 2026, the company’s plans for the “Model 2” car and its manufacturing location remain undisclosed.
The proposed investment in India represents one of the largest foreign investments in the country, with the potential factory aiming for an annual production capacity of up to 500,000 cars. Tesla may also explore establishing a battery manufacturing unit in India, adopting the gigafactory model seen in its other international plants.
India’s EV market has lagged behind China’s, with Chinese EV giant BYD and other international firms like Vietnam’s VinFast and China’s SAIC Motor through a partnership with Indian steelmaker JSW, showing interest in the Indian market. The Indian government is set to formally invite applications for its EV tariff reduction scheme by the end of the month, aiming to accelerate the country’s transition to electric mobility.
