Tesla and the Indian Government Discussed Auto Incentives and Battery Making-Sources

May 23, 2023
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Stephanie Bedard-Chateauneuf
Tesla Inc (NASDAQ:TSLA) has met with authorities regarding incentives granted by India for car and battery manufacture, according to a person with direct knowledge of the discussions, as the automaker considers re-entering the Indian market.

Tesla Inc (NASDAQ:TSLA) has met with authorities regarding incentives granted by India for car and battery manufacture, according to a person with direct knowledge of the discussions, as the automaker considers re-entering the Indian market.

According to Reuters, the American electric vehicle manufacturer has proposed establishing a facility in India to manufacture electric vehicles (EVs). According to the individual with direct information, plans to produce EV batteries locally are also being discussed.

Tesla is "still testing the waters and trying to understand the local policies," according to the individual, who declined to be identified because the discussions are private.

During the tour, specifics of which have not been made public by the business or any Indian ministry, Tesla visited India's deputy IT minister Rajeev Chandrasekhar on Thursday, one of the highest-ranking officials with whom the company met, according to an Indian government source.

According to the two sources, Tesla's delegation included Karn Budhiraj, a top supply chain executive based in the United States.

The negotiations in India mark a shift in posture for the American electric vehicle manufacturer.

Late last year, it was focused on lowering import duties on cars, which can be as high as 100%, and negotiations with the Indian government broke down. Tesla is eager to make automobiles in India, but the company argues that it needs to evaluate the strength of demand first.

Recent discussions have touched on India's levies on imported cars, but have primarily focused on how Tesla could take advantage of a government initiative, according to the first source.

India has set aside almost $6 billion for two schemes aimed at increasing EV sales and manufacture. The programs allow automakers and battery producers to get monetary incentives for selling and exporting locally manufactured automobiles and parts.

Tesla has stated a target of selling 20 million EVs per year by 2030, which would necessitate enormous new investment in assembly plants and battery capacity.

Outside of the United States, Tesla has a facility in Shanghai, China, and another in Brandenburg, Germany.

In addition to India, Tesla has been in discussions with officials in Indonesia and South Korea about potential investments over the last year.

India has the third-largest vehicle market in the world. The government of Prime Minister Narendra Modi has set an ambitious goal of having EVs account for 30% of total automobile sales in India by 2030, up from roughly 1% now.

Tesla's talks with India come at an important time for Modi, who is attempting to lure investors ahead of next year's national elections, in which he will seek a rare third term.