The Government of India is looking forward to a partnership with Tesla wherein the cost of production for the company would be the lowest when compared with the entire world. But India faces a big challenge to win a production commitment from Tesla.
"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,” transport minister Nitin Gadkari said. India wants to boost local manufacturing of electric vehicles (EVs), batteries and other components to cut costly imports and curb pollution in its major cities. This comes amid a global race by carmakers to jump-start EV production as countries work towards cutting carbon emissions.
India's fledgling EV market accounted for just
5,000 out of a total 2.4 million cars sold in the country last year as negligible charging infrastructure and the high cost of EVs deterred buyers. In contrast, China, where Tesla already makes cars, sold 1.25 million new energy passenger vehicles, including EVs, in 2020 out of total sales of 20 million, and accounted for more than a third of Tesla's global sales. Gadkari said that as well as being a big market, India could be an export hub, especially with about 80% of components for lithium-ion batteries being made locally now.
"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 hyper loop between Delhi and Mumbai.
India is drawing up a production-linked incentive scheme for auto and auto component makers as well as for setting up advanced battery manufacturing units, but the details are yet to be finalized.
Switching to cleaner sources of energy and reducing vehicle pollution are seen as essential for India to meet its Paris Accord climate commitments.
India last year introduced tougher emission rules for carmakers to bring them up to international standards. It is now looking at tightening fuel efficiency rules from April 2022, which industry executives say may compel some automakers to add electric or hybrid vehicles to their portfolios.
Battered by the Covid-19 pandemic, the industry says it needs longer to make the transition.
News reports had already stated that as many as five states are eager to get Tesla onboard. These are Karnataka, Maharashtra, Gujarat, Telangana and Tamil Nadu.
