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How is India wooing Tesla?

Offers lower production costs than what China is offering!

India is going all out to woo Tesla, to invest in India. A host of incentives are being offered to make the production of Tesla cars, in India, more cost-effective than in China. The Union Transport Minister Mr.Nitin Gadkari is personally looking into the matter.

Tesla has already registered as a company in India and plans to enter the company by mid-2021. It could start importing the Model 3 Electric Sedan for sale in India.

“Rather than assembling (the cars) in India, they should make the entire product in the country by hiring local vendors. Then we can give higher concessions,” Gadkari said in an interview, without giving details of what incentives would be on offer. “The government will make sure the production cost for Tesla will be the lowest when compared with the world, even China when they start manufacturing their cars in India. We will assure that,” he said.

India has big plans for boosting the manufacturing of Electric Vehicles, batteries, and other components. This will cut down the import costs hugely. EVs are expected to reduce carbon emission and pollution in India significantly. However, Tesla is yet to give any official or confirmed production commitment to India.

At present, against the worldwide volume of 2.4 million units sold in 2020, India’s accounted for just 5,000 units. One major deterrent is the lack of even minimal charging infrastructure as also the relatively very high cost of EVs. And India lacks a comprehensive EV policy, like China.

Tesla has already sold over 1.25 million units of the EV sedans manufactured in China in the Chinese market. In 2020, more than 20 million Tesla’s have been sold across the World; and China accounted for more than one-third of the sales.

China is also the World’s biggest Automobile Market. However, the Union Minister, Mr.Nitin Gadkari is optimistic of the potential of India’s EV market growing very rapidly. Today, about 80% of components for Lithium-Ion batteries are being in India, locally. There is a large scope for exports too.

“I think it’s a win-win situation for Tesla,” Gadkari said, adding he also wanted to engage with Tesla about building an ultra-high-speed hyperloop between Delhi and Mumbai.

The country is drawing up attractive production-linked incentive schemes for Auto and Auto Component manufacturers as also the battery manufacturing facilities. However, full details are awaited.

India has already switched over to tougher emission norms in 2020; and will tighten up fuel efficiency norms too, from April 2022. This could compel the Automajors to look at EVs and Hybrid Vehicles as most vital in their product portfolios.

However, the Covid 19 pandemic has affected the economy; and Auto Industry too, very adversely. And the Automakers have been asking for delaying the transition by a few years.

However, Mr.Gadkari said he was not directly responsible for making the decision on whether to delay but expressed confidence that India would meet its Paris treaty commitments; and this without disrupting economic growth. “Development and environment will go hand in hand. We will take some time but we will soon reach the international standard norms,” he said.


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