India is nearing an agreement with Tesla to allow the U.S. company to import its electric cars to the country starting next year and establish a factory within two years, as per a Bloomberg report.
The announcement might occur at the Vibrant Gujarat Global Summit in January, with Gujarat, Maharashtra, and Tamil Nadu being considered due to their established electric vehicle ecosystems.
Tesla is reportedly looking at an initial investment of about $2 billion for the plant, planning to increase auto parts purchases from India to $15 billion.
The company aims to manufacture some batteries locally to reduce costs. Entering India, where demand for electric vehicles is rising, could benefit Tesla. However, India’s electric vehicle market is still developing, representing only 1.3% of total passenger vehicle sales last year.
Tesla does not directly import cars to India due to high tariffs, but locally manufactured cars could potentially be priced as low as $20,000. Trade Minister Piyush Goyal, after visiting Tesla’s plant, stated that the company plans to double auto parts purchases from India to $1.9 billion this year.
While Tesla and India resumed talks in May after a yearlong impasse, no final decision has been reached. India is considering reducing import taxes for international EV manufacturers for five years if they commit to establishing local factories. Elon Musk, Tesla’s CEO, expressed plans for a “significant investment” in India, with a potential visit in 2024.