Tesla starts manufacturing of cars in Germany for export to India this year
Tesla has started making cars at its manufacturing plant in Germany for its export to India in the latter part of this year, according to various sources. A team from Tesla is set to visit India in the following months to look for potential sites for a manufacturing plant.
According to Reuters, Tesla is producing right-hand drive cars for the export to India. India has cut the import tax on certain electric vehicles last month by a significant margin, provided the manufacturers invest a minimum of $500 million in India, and start production there within three years. This is an advantage to Tesla, which had tried to lobby for several months to try to pay lower taxes, but faced defiance from local carmakers.
One of the sources stated, “The right-hand drive cars which will be allocated to India, they have started building them,”, with some cars due to be shipped to India by the end of the year already.
It was not obvious prima facie which model Tesla plans to export to India. At present, it currently only manufactures the Model Y at its factory near Berlin.
The plans for shipment to India is the first indication of right-hand drive cars being produced in Berlin. Tesla’s Shanghai plant, its primary export factory located nearer to right-hand-drive markets, such as Australia and Japan, has so far handled the production of such vehicles.
Tesla imported RHD (Right-Hand-Drive) Model Y vehicles for its launch in the UK from China and has not stated whether it has shifted to importing from Berlin.
The carmaker has eyed the Indian market for years and its officials visited the country several times over 2023. CEO Elon Musk also met Prime Minister Narendra Modi in New York in June 2023.
Tesla’s entry into the Indian market comes at a strategic time, when it is having to face both shortages from its primary markets, U.S. and China, and growing competition from Chinese manufacturers. Consequently, Tesla has reported a drop in its first-quarter deliveries.
Tesla’s India entry plan also includes investment in a charging network, which will be additional to the $2 billion set for the plant.
“Tesla already imports parts from India and is now looking at reducing sourcing from China and making India a bigger sourcing hub,” said one of the sources.
Tesla is looking at Tamil Nadu in the south, Maharashtra in the west, and Modi’s home state Gujarat for its factory, which it expects to build in two years.
India’s EV market, albeit small but growing, is presently dominated by the domestic carmaker Tata Motors. EVs made up of 2% of total car sales in 2023 and the government is targeting 30% by 2030.
Earlier this year in January, Tesla’s Vietnamese rival VinFast agreed to invest $2 billion in India and has started building an EV factory in Tamil Nadu.
