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India is getting closer to Tesla with cheaper production costs

Transportation Minister Nitin Gadkari said Agency Reuters: The India Willingness to offer incentives to ensure that Tesla’s production cost will be lower than it is in China If the carmaker commits to building its electric cars in the South Asian country.

Gadkari’s offer comes weeks after billionaire Elon Musk registered a company in India in a move toward entering the country, possibly as early as mid-2021.

Sources familiar with the matter told Reuters: Tesla plans to start importing and selling the Model 3 electric car in India.

Gadcari said in an interview: Instead of assembling cars in India, the entire product has to be made in the country by contracting with local vendors, after which we can make higher concessions, without giving details of the incentives being offered.

“The government is keen that the production cost of Tesla is the lowest in the world, even China, when it starts building its cars in India,” he added.

India wants to boost local manufacturing of electric cars, batteries and other components to cut costly imports and curb pollution in its major cities.

This comes amid a global race by car manufacturers to start producing electric cars as countries work to cut carbon emissions.

And theIndia’s nascent electric vehicle market accounted for only 5,000 of the 2.4 million cars sold in the country last year, as limited charging infrastructure and the high cost of electric vehicles deterred buyers.

In contrast, in 2020 China, where Tesla manufactures cars, sold 1.25 million new energy vehicles, including electric vehicles, out of a total of 20 million sales, and accounted for more than a third of Tesla’s global sales.

India also does not have a comprehensive electric vehicle policy like China, the world’s largest auto market, forcing companies to invest in this sector.

In addition to being a large market, India could be an export hub, Gadkari said, especially with about 80 percent of lithium-ion battery components now manufactured locally.

He added: I think this offer is profitable to everyone, adding that he also wants to do business with Tesla about building a high-speed hyperloop between Delhi and Mumbai.

India is laying out a production-related incentive scheme for makers of automobiles and auto components as well as for setting up advanced battery manufacturing units, but details have yet to be finalized.

Shifting to cleaner sources of energy and reducing vehicle pollution are seen as essential for India to fulfill its climate obligations under the Paris Agreement.

India last year introduced stricter emissions rules for carmakers to bring them up to international standards.

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