Tesla begins production of cars in Germany for India exports this year: Report

Tesla has begun production of right-hand drive cars at its plant in Germany for export to India later this year, three persons in the know informed Reuters. 

A team from Tesla is slated to visit India later this month to look at sites for a local car manufacturing plant that would require an investment of about $2 billion, two of the three sources told the newswire on condition of anonymity. 

In March India introduced a new EV policy, slashing the import tax rate on certain electric vehicles if their makers invest at least $500 million in the country and start production there within three years. The move is a win for Tesla, which was asking for lower taxes but had faced resistance from local carmakers. 

"The right-hand drive cars which will be allocated to India, they have started building them," one of the people said, with some cars due to be shipped to India by the end of the year.

It was not immediately clear which model Tesla plans to export to India. It currently produces only the Model Y at its factory near Berlin. Under the new Indian policy, companies can import up to 8,000 cars a year at the lower tax rate. Tesla did not immediately respond to Reuter's email seeking comment outside U.S. office hours. 

The plans for shipments to India are the first indication of right-hand drive (RHD) cars being produced in Berlin. Tesla's Shanghai plant, its primary export hub located nearer to right-hand-drive markets, such as Australia and Japan, has so far handled production of such vehicles.

Tesla imported RHD Model Y vehicles for its launch in the UK from China and has not said whether it has shifted to importing from Berlin. The carmaker has eyed the Indian market for years and its officials visited the country several times over the past year. CEO Elon Musk also met Prime Minister Narendra Modi in New York last June.

Tesla's push into India comes at a time when slowing EV demand in its main U.S. and China markets coincides with increasing competition from Chinese players. That caused Tesla to report a drop in its first-quarter deliveries and miss estimates, the newswire reported.