Tesla to produce EVs in China; India loses bid to woo EV maker

American electric vehicle (EV) maker Tesla is to set up a production facility in China but remains tight-lipped on the deal, reports Reuters.

Tesla has been in the news as an industry disrupter since its debut in 2012, with the Model S, its first all-electric luxury offering. The company has garnered interest globally with a slew of technological advancements as offerings that promise to replace fossil-fuel dependent vehicles without compromising on driving capabilities.

As per reports, China has eased some policies that will enable the EV maker to easily set up its production facility that includes allowing the wholly owned factory to come up in a free trade zone, helping it to lower its production cost in the world’s largest EV market. 

India on the backburner

With Tesla preferring to set up shop in China, any plan to set up a production facility in India would have been put on hold. From Tesla’s point of view, China already has driven a fair distance in terms of electric mobility, supported by the government’s favourable subsidies and recent 2019/2020 NEV targets. In comparison, the EV industry in India, despite the recent NITI Aayog push for electric mobility by 2030, remains nascent and the country is in dire need of an adequate charging infrastructure, among other EV industry growth drivers. 

The latest Tesla news update comes in the wake of the report in June 2017, when Tesla CEO Elon Musk had mentioned that the company was in discussion with the government of India for getting temporary relief on import penalties/restrictions till a local factory was built. It seems now that China has been able to offer a sweeter deal.  

The Indian government’s ambitious shift towards electric mobility as well as ‘Make in India’ initiative was seen as a way to attract global manufacturers to shift their production in the country. This was reaffirmed when Musk had spoken about India’s ambition to achieve all-electric vehicle by 2030, when he had tweeted about the same, with Anand Mahindra, chairman of Mahindra Group inviting the entrepreneur to world’s fourth largest PV market.

The optimism of India becoming Tesla’s first production base outside its market was also viewed closely by the Indian government. This was seen when Musk had replied to a query of a user about setting-up its production base in India, where the serial entrepreneur said “Maybe I'm misinformed, but I was told that 30% of parts must be locally sourced and the supply doesn't yet exist in India to support that.”

The government of India’s ‘Make In India’ Twitter handle was quick to clarify and make a pitch inviting the company to set up its manufacturing base in the country – “No sourcing conditions are mandated when it comes to manufacturers as goods are manufactured in India.” It also pointed out that the country’s FDI policy doesn’t mandate any minimum sourcing norms for manufacturers and the company is free to sell in any manner: wholesale, retail including e-commerce.