What Can India Expect from Elon Musk's Tesla Arrival?

Tesla CEO Elon Musk, after his meeting with Prime Minister Narendra Modi, hinted at Tesla's entry into India's electric mobility and the commercial space sector soon. "I am confident Tesla will be in India and will do so as soon as humanly possible." These words by Musk's remarks come after Tesla had proposed setting up a factory to build electric vehicles in India last month. 

Adding that India is great for solar energy investment, Musk hopes to bring Starlink, a satellite-based broadband Internet service developed by his company SpaceX to India.

While Musk is figuring out the "right timing" to make any announcement regarding his investments in India, it is worth wondering what we really get with a Tesla in India.

Why?

With its expected price to be around ₹70 lakhs, Tesla isn't a car that most people in India would be able to afford. Along with India's largest electric car maker Tata Motors (with over 70% market share), several prominent automotive companies are accelerating the manufacturing of electric cars. Elon Musk himself acknowledged the success of South Korean automaker Hyundai last year, when Hyundai had a market share of 9%, whereas Tesla had dominated with 75.8% back in the US. 

So, unless Tesla reduces its price, which it most likely won't, a Tesla investment in one of the world's largest auto markets may not be substantial for at least the consumers but will surely set a benchmark. Nevertheless, a Tesla gigafactory that makes batteries units, energy storage products and vehicle powertrains could benefit India and give a major boost to India's overall EV industry.

Could Tesla's Gigafactory 6 be in India?

Currently, Tesla has a total of five gigafactories situated in Nevada, New York, Shanghai, Texas, and Berlin, with an additional one being constructed in Mexico. A year ago, Tesla initiated discussions for establishing a Gigafactory in India. But, the plans were delayed when the Indian government declined to reduce import taxes for Tesla's electric vehicles manufactured in China. 

While the Indian administration wanted Tesla to manufacture, sell and export vehicles from a local factory, Musk was keen on enabling the company to initially offer competitively priced vehicles manufactured elsewhere for sale.

Despite the deadlock, the prospects of Tesla's next factory being established in India are far from over. In an interview, Musk said that Tesla will probably pick another location towards the end of this year for factory setup. When questioned if he would find India interesting, he said "absolutely." According to reports, Tesla Inc. put forward a proposal last month to establish a factory in India for manufacturing electric cars for both domestic sales and export purposes. 

Tesla's association with India dates back to 2021, when the company registered Tesla Motors India and Energy, in Bengaluru in January. The company had been registered with a paid capital of ₹1 lakh, as an unlisted private entity. Now, whether this association leads to a gigafactory setup or not, we will surely find out by the end of the year. If not, we will know more about Tesla's plans next year, if Musk accepts Prime Minister Modi's invitation and visits India. 

India is not only attracting global companies in the automobile sector but also emerging as an investment destination for semiconductor manufacturing too. Prime Minister Narendra Modi also extended an invitation to American chip maker Micron Technology on Thursday.

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