Chief Executive Officer Elon Musk
all but confirmed Tesla
would enter India in January after months of speculation. The world’s second-richest man on Jan. 13 tweeted “as promised” in response to a report on a Tesla-focused blog that the automaker was in talks with several Indian states to open an office, showrooms, a research and development center -- and possibly a factory.
Local media reported last month that Prashanth Menon, who has been with Tesla for around four years, was elevated to country CEO.
The EV maker is closely monitoring announcements from Prime Minister Narendra Modi’s government regarding changes to the country’s goods-and-sales tax that may reduce the cost of owning an electric car, the person familiar with the matter said. It’s also waiting for further incentives for EV makers under India’s production-linked incentive program before it makes a real push into the country.
Under the PLI, as it’s called, manufacturing incentives will rise each year in an ongoing effort to entice the world’s biggest brands to make their products in India and export to the world. Last month, India’s cabinet also approved a 181 billion rupee ($2.5 billion) plan to boost battery storage capacity to 50 gigawatt hours.
Tesla’s foray into India may well prove challenging, however, even with sweeteners. Unlike China, India hasn’t rolled out the welcome mat for electric cars. Tesla set up its first factory outside of the U.S. in Shanghai and now dominates sales of premium EVs in China. EVs account for about 6% of China’s annual car sales, according to BloombergNEF, compared to less than 1% in India.
Read More: Tesla might face a bumpier ride breaking into India after China success
The expensive cost of Tesla cars is viewed as a sticking point too. Although India is home to a budding middle class, pricey automobiles remain well out of reach of the vast majority of the population. The lack of charging infrastructure is another impediment to large-scale EV adoption.
Tesla has picked Karnataka, a southern state whose capital is Bangalore, for its first plant, the state’s chief minister said in February. Tesla hasn’t commented. The automaker has been negotiating with local officials for six months and is actively considering car assembly in the suburbs of Bangalore, other people familiar with the matter said at the time.
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