India is “absolutely” on Musk’s radar for setting up Tesla EV manufacturing unit

A year after putting on hold its plans to sell Tesla cars in India, Elon Musk has hinted at the possibility of setting up a manufacturing plant in the country. 

Musk, who is Tesla Inc’s Chief Executive Officer, said at an event that the company would probably pick a location for a new factory by the end of this year. When asked if India was interesting, Musk said, “Absolutely”.

Outside the US, Tesla has factories in China and Germany. Recently, it announced a new unit in Mexico as part of its strategy to broadbase its manufacturing.

Last year, Tesla Inc had put on hold its plans to sell electric cars in India, abandoned a search for showroom space and reassigned some of its domestic team after failing to secure lower import taxes. But the government has been pushing Tesla to commit to manufacturing locally without any conditions.

In January 2022, Musk had tweeted that Tesla was facing a ‘lot of challenges’ with the Indian government. Musk had said that the company would not manufacture its products unless it is allowed to first sell and service its cars in the country. The company, which also accepted pre-bookings from customers in India for its Model 3 in 2016, with a booking amount of $1,000, had to drop the plan because India has the highest import duties in the world.

Although the government’s stance has not changed since then, Musk may have reviewed his strategy in a bid to deleverage Tesla’s presence in China. Many large American companies including Apple are looking to expand business and manufacturing in India while reducing their dependence on China, experts said.

Last week, senior leadership team from Tesla met top government officials which revived talks of the iconic electric car maker’s entry into the Indian market. Musk is expected to meet Prime Minister Narendra Modi during the latter’s visit to the US next month.