Tesla Inc has reportedly proposed setting up a factory in India to build electric cars for domestic sale and export. According to a report by Reuters, the carmaker told government officials on Wednesday.
Senior executives from Tesla are on an India visit to meet the Indian government officials on May 17 and 18 to discuss issues like local procurement of parts etc. Citing a source with direct knowledge of the matter, the Reuters report says that the proposal comes after India refused to agree to Tesla’s request last year to lower the import tax on cars, which can reach as much as 100%.
While India wants the carmaker to build vehicles locally in the country, Tesla wants to test the market first with imports, and the talks ended in a deadlock.
Talks between Jio and Tesla:
A report by Financial Express suggests that the Mukesh Ambani-headed telco is in early talks with Tesla for the setup of the private network, and further progress will only happen if Tesla finalizes its plans to set up a manufacturing plant in the country. “The talks between Jio and Tesla are at a preliminary stage, and any further developments are expected only when the latter firms up its plans for setting up a manufacturing unit in India,” an unnamed industry source revealed to the publication.
The report suggests that Jio is also reaching out to firms across automobile, healthcare, manufacturing, and other industries with possible use cases of 5G, offering to build and manage their private networks. The captive private 5G network setup from the telco will help these firms achieve high data speed and data carrying capacity within their premises, which is not possible if they depend on public networks.
Discussions between Tesla and Indian government:
Tesla’s senior executives are expected to hold discussions with Indian government officials. These meetings aim to explore potential opportunities for sourcing parts from India, further strengthening Tesla’s ties with the country.
Making cars locally aligns with Indian Prime Minister Narendra Modi’s pitch to attract companies with his “Make in India” campaign, especially as companies look to diversify their supply chains beyond China. Tesla met officials from Prime Minister Narendra Modi’s office and other ministries on Wednesday, said the person and another source familiar with the matter. The meeting comes weeks ahead of Modi’s visit to the United States in June.
Tesla proposes local manufacturing:
The proposition comes after India last year refused to accept Tesla’s request to reduce import tax on cars, which can go up as high as 100 percent on CBUs costing above $40,000. India wanted Tesla to build cars locally, whereas the carmaker wanted to test the water first with imports, and the discussions ended in an impasse.
While Tesla did not broach the subject of reduction of import taxes with officials in its latest discussion, it suggested establishing a factory, without offering details on either the location or the investment, a person in the know told Reuters on condition of anonymity. There were talks on which models could potentially be offered in India and even the scope of setting up a battery manufacturing plant in the future.