American Tesla is close to concluding an agreement on the production of electric vehicles in India, reported by Bloomberg, citing knowledgeable sources. The construction of an assembly plant in the state of Karnataka, in the vicinity of the state capital, Bangalore, is under discussion. The negotiations have been going on for six months, the agency's interlocutors say.
Tesla is conducting due diligence on office real estate in the region and plans to establish a research and development (R&D) venture. The company has already registered its Indian subsidiary and offices in downtown Bangalore.
Tesla built its first factory outside the US in China and is now the country's leader in premium electric vehicles. It also launched a Supercharger electric vehicle charging station in Shanghai.
Electric vehicle sales account for about 5% of the total annual car sales in China, while in India this segment is less than 1%, according to Bloomberg. The agency notes that entering the Indian market may be more difficult for the company than the Chinese one.
According to the International Energy Agency (IEA), China is home to about 60% of all public slow and fast charging stations for electric vehicles in the world. Chinese carmakers are creating competitive electric vehicle models and developing a diversified ecosystem, which means the country “could change the current situation in the global automotive industry,” analysts at UBS Group AG said in a January report.
India is taking similar steps, but on a smaller scale.
The country's authorities have also reduced the tax on electric vehicles to 5% from 12% since August 2019. Thus, the figure was significantly lower compared to the 28% tax on other cars, which provoked criticism from automakers such as Toyota Motor.