Tesla will manufacture its most affordable electric vehicle in India

• Published On: 25 July 2023
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Tesla's planned entry in the Indian market, priced about Rs 20 lakh ($24,000), is expected to be a game changer. This price point is 25% less than Tesla's current lowest-priced product, the Model 3 sedan, which costs little over $32,200 (Rs 26.32 lakh) in China.

Reuters reports that Tesla representatives would consult with India's commerce minister this month to propose the construction of a factory to make the Model 3, a brand-new $24,000 car.

Tesla has expressed interest in establishing a plant in India to create low-cost electric cars (EVs) for the domestic market and for export, according to the source, who added that the business has suggested that it would be for the new model. The talks reflect a striking reversal for the firm after efforts last year to decrease import taxes on EVs transported to India were thwarted by government officials' demands that the company commit to manufacturing cars locally. Tesla’s Factory plan for EV’s is to launch its most affordable EV in India.

Tesla Factory Plan Process

The meeting with the commerce minister would represent Tesla and the Indian government's highest level of dialogue since June, when Elon Musk met with India's Prime Minister Narendra Modi and announced his intention to invest significantly in the country.

The 2 million rupee ($24,000) EV Tesla personnel were alleged to have indicated in conversations that a potential Indian plant would be 25% less expensive than the company's current lowest-priced product, the Model 3 car, which sells for little over $32,200 in China. The Times of India newspaper stated earlier this month that the new Tesla vehicle's target price is $24,000.

Tesla Long-Term Success Plan

In India, the world's third largest auto market, electric vehicles currently account for less than 2% of total vehicle sales.

According to Reuters, Tesla executives visited India in May and met with officials about building a production base for cars and batteries in India.

Also, according to two people with knowledge of the conversations who asked not to be identified because the discussions are private, discussions with Indian government officials in New Delhi are likely to resume this month.

As part of that, Tesla executives will meet with Indian Commerce Minister Piyush Goyal, according to the first person, and negotiations will focus on establishing an EV supply chain and discussing site allocation for manufacturing. A request for comment was not returned by the commerce ministry.

Tesla has aggressively discounted its older models since the beginning of the year, and Musk has consistently stated that the company's long-term success will be dependent on significantly lowering the cost of EVs. Tesla has stated that its next-generation car platform will reduce production costs by 50% and that various models - including an autonomous "robotaxi" - might be built on it.

Tesla is building a plant in Mexico to produce vehicles on that low-cost, high-volume platform, which the company has claimed it will also utilize in other sites. Tesla is now producing electric vehicles in California and Texas. 

Tesla's Shanghai factory is its largest, accounting for over 40% of the company's global capacity. Plans to expand capacity there are awaiting regulatory permission.