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Tesla Explores Manufacturing Opportunities in India, Seeks Incentives and Tax Benefits

Tesla Exploring Indian Market for Auto Parts and Electronics Chain

13 July 2023

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Kunal Tyagi

India produced 3X more unicorns than China in 2022.png
  • Tesla is in discussions with Indian officials to establish an auto parts and electronics chain in India, seeking incentives, tax benefits, and a supportive ecosystem for its manufacturing unit.

  • The company expresses a preference for an "all in-house" approach but may adopt a 'China plus one' strategy, diversifying its manufacturing to India.

  • Challenges in India include infrastructure requirements and widespread adoption of electric vehicles, but Tesla sees the Indian market as an opportunity to leverage world-class technology and build a critical mass serving the industry.

Tesla has engaged in talks with Indian officials to explore the establishment of an auto parts and electronics chain in India. The company is seeking incentives, tax benefits, and a supportive ecosystem for its manufacturing unit. While the Indian government has encouraged Tesla to assess the existing auto components supply chain within the country, the company has expressed interest in establishing its own supply chain ecosystem. The discussions also revolve around potential incentives and tax breaks that could be offered to Tesla.


Preference for In-House Approach and Challenges Ahead:


During meetings with Indian executives, Tesla expressed its preference for an "all in-house" approach and its reliance on a specific set of quality standards that can only be replicated through its existing partners. However, experts note that Tesla could be exploring a 'China plus one' strategy, diversifying its manufacturing to India. Challenges in India include infrastructure requirements for manufacturing and supporting a manufacturing facility, as well as widespread adoption of electric vehicles.


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Positive Outlook and Potential Investment:


Elon Musk's intention to establish a presence in India, expressed after his meeting with Prime Minister Narendra Modi, suggests a positive turn of events and a renewed interest from Tesla. The Indian government has extended an invitation to Musk to explore investment opportunities in electric mobility and commercial space sectors. Tesla's entry into the Indian market is seen as an opportunity to build a critical mass serving the industry, leveraging India's world-class technology and intellectual economy.


Balancing In-House and Domestic Suppliers:


Tesla, known for its software-defined vehicles, intends to leverage a balanced combination of in-house and externally sourced technologies when entering new markets. The company plans to rely on new domestic suppliers for relatively less complex auto parts, indicating its willingness to engage with local manufacturers and establish a robust supply chain in India.


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