Tesla Reportedly Exploring Locations in India for $2-3 Billion EV Factory

Tesla will send a team from the United States to India by late April to study sites for a proposed $2 billion to $3 billion (roughly Rs. 16,691 crore to Rs. 25,036 crore) electric car plant, the Financial Times reported on Wednesday, citing people familiar with the matter.

The company’s reported push into India comes at a time when EV demand is slowing in its main markets of the US and China while competition there is heating up. That caused Tesla to report a drop in its first-quarter deliveries and miss estimates.

The EV maker will focus on Indian states that have automotive hubs such as Maharashtra, Gujarat, and Tamil Nadu, the report said. These regions are already established centers for the automotive industry, which could provide Tesla with a supportive infrastructure and skilled workforce.

Tesla’s entry into the Indian market could significantly boost the country’s EV ecosystem. India has been promoting electric mobility with various incentives and policies aimed at reducing pollution and dependency on fossil fuels. A local manufacturing plant would likely help Tesla reduce costs and make its cars more affordable in India, a market where price sensitivity is high.

Moreover, setting up a plant in India aligns with Tesla’s broader strategy to diversify its manufacturing footprint globally. This move could also help mitigate risks associated with geopolitical tensions and trade disruptions. The Indian government, in turn, has been keen to attract foreign investment in manufacturing and has been negotiating with Tesla to set up a local factory for years.

While the details of the potential factory’s capacity and product lineup remain unclear, the move is seen as a strategic expansion into one of the world’s fastest-growing automotive markets. Tesla’s investment could pave the way for increased adoption of electric vehicles in India, contributing to the country’s environmental goals and industrial growth.

The company said in July last year it was interested in building a factory in India to produce an EV priced at $24,000 (Rs. 20 lakh). It also called for lower taxes on more expensive models it wants to sell in India, Reuters has reported.