Tesla Building Gigafactory In India
Tesla’s plan to sell electric cars in India has revealed an interesting fact, and that is that it’s almost a certainty now that Tesla will build a Gigafactory in India.
How do we know this? Well, we know this because of a deal signed for Tesla to sell cars made in Germany in India.
Tesla in Germany it builds the Model Y there, right? Right now, Tesla barely has any presence in India because you have to pay a 100% import tax.
Well, purchase buyers of cars in India, they have to pay a 100% import on vehicles made outside of India. The import taxes are ridiculous.
They’re like a lot of African countries, where they try to make it really hard for people to own a car. You got to be super rich to get a car.
The Indian car market, as a result, is very small. Tesla is going to begin building cars in Germany that it will export to India.
Building the Gigafactory
That tells us essentially that it’s a done deal, that Tesla will build a Gigafactory in India.
The reason for that is under India’s new EV policy, companies investing in country can import up to 8,000 cars a year at a lower tax rate.
In other words, for Tesla to be able to sell cars that they make in Germany, in India, without any prohibitive, insane import taxes, they have to invest.
They have to build a factory in India. So we can now see that it’s almost a certain done deal.
Tesla has begun production of right-hand drive cars at its plant in Germany for export to India later this year, says three people are aware of the company’s plans as it’s moving to a possible entry into India.
Well, people are saying it’s possible, but I think it’s very clear that this suggests Tesla.
We know that they’ve sent staff to India They’re now looking for a location to build Tesla’s gigafactory.
A team from Tesla is visiting India, and they plan to build a factory costing approximately 2-3 billion US dollars. The right-hand drive cars 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.
This would mean that Tesla would probably likely US right-hand drive production of the Model Y in Germany to send cars from Germany to the UK.
There’s no way known Tesla would build a right-hand drive production facility simply to send a small number of cars to India.
It would not make economic sense. It’d be absolutely insanity. Now, of Of course, that’s not Tesla’s plans.
They’ve thought this through and they thought, Well, the UK car market is very big. We currently sell the Model Y made in China there.
What about if we actually sold the Model Y made in Germany in the UK instead of in China? It would cost a lot less money to actually get those vehicles from Germany to the UK. The cost would be an absolute fraction.
Now, it’s not immediately clear which model Tesla plans to export to India, though that’s the other thing.
Tesla could be planning on manufacturing the model, too. But considering the fact that these employees at Tesla are saying they’re already setting up right-hand drive production, I think it’s safe to assume this is Model Y right-hand drive production.
India last month slashed the import tax rate on certain electric vehicles if their manufacturers invest a minimum of $500 million in India and start production there within three years.
Now, this decision, some analysts are saying, is a win for Tesla, which has lobbied for months for lower taxes, but it’s faced resistance from local car manufacturers, especially ones owned by the Indian government like Tata.
Lower Taxes and Growing EV Market in India
Under the new Indian policy, companies can import up to 8,000 cars a year at a lower tax rate. Now, 8,000 cars is a pretty small number.
I’m not really sure how this really helps Tesla all that much. But the plans for shipments to India are the first indication of right-hand drive cars being produced at Tesla’s factory in Berlin, in Germany.
Tesla Shanghai plant its primary export hub located nearer to right-hand drive markets like Australia, Malaysia, Thailand, Japan, even South Africa, has so far handled production of those vehicles.
Tesla imported right-hand drive Model Y vehicles for its launch in the UK from China. It’s not said whether it’s shifted that from China to Berlin, but it’s fairly obvious that that will happen.
The carmaker has eyed the Indian market for years, says Automotive News, and its officials visited the country several times over the past year.
CEO Elon Musk also met with the Prime Minister in New York last June. Tesla’s push into India is coming at a time when EV demand is… Well, it’s not slowing, the media are saying it is, but the truth is more EVs are being made.
It’s more manufacturers, there’s more models, there’s more competition. It’s a bloodbath in China.
That’s Tesla’s main country for production, and it’s also its second most important country worldwide for sales. This has caused Tesla to have possibly a drop in first-quarter deliveries.
There’s been other factors as well, but that’s one of the factors. Tesla’s entry into India is clearly a strategic way to get access to another car market.
Diversifying Sourcing Away from China
Tesla already imports parts from India and is now looking at reducing sourcing from China and making India a bigger a sourcing hub.
So part of Tesla’s plan here is to not have so much reliance on Chinese manufacturers and on China.
And that’s a pretty smart strategy, in my opinion. Tesla is looking at the Southern state of Tamil Nadu, Maharashtra in the West, and Modi’s home state of Gujarat for its factory, which it expects to build in two years, said sources.
India’s EV market is small, but it’s growing, and it’s dominated by domestic car manufacturer Tata, which owns Jaguar and, of course, Landrover.
Other trip models make up only 2% of car sales in India in 2023, but the government wants to hit 30% by 2030.
That would mean it would be miles behind India and Europe, and it would make India feel like maybe it’s not taking electrification seriously.
Clearly, India is really targeting Tesla and clearly giving them some incentives to build the Gigafactory in that location.
In January, Tesla’s Vietnamese rival, VinFast, agreed to invest $2 billion in India and has begun building an EV factory in Tamil Nadu.
So this could be the beginning of an onslaught of EV production sites in India. And the other interesting thing is this disclosure that Tesla will begin building right-hand drive Model Y at its factory in Germany.