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Tesla Begins Making Cars In Germany For Export To India This Year: Sources

Tesla from Germany to India

Tesla, the world’s leading electric car manufacturer, has commenced the production of right-hand drive cars at its Germany. According to some reports, these right hand drive cars are being manufactured for export to the Indian market. With this move Tesla plans to launch their cars in India which is the the world’s third-largest car market. “The right-hand drive cars which will be allocated to India, they have started building them,” a person who’s aware about the company’s plans told Reuters.

Tesla Begins Making Cars In Germany For Export To India This Year: Sources

Also, a team from Tesla is expected to visit India soon to explore potential sites for a local manufacturing plant, which will require an investment of around $2 billion. This investment aligns with India’s recent decision to reduce import tax rates on limited number of electric vehicles on the condition that manufacturers invest at least $500 million in the country and start local production within three years.

A automaker who fulfills this condition can import up to 8,000 cars annually at a reduced tax rate. This reduction in import taxes is especially favorable for Tesla as the automaker was fighting for lower taxes from quite some time. As per the sources, Tesla has already started the production of right-hand drive cars for the Indian market, and the company plans to ship some units by the end of 2024.

Tesla Begins Making Cars In Germany For Export To India This Year: Sources

However, it is unclear as to which model will be exported to the Indian market. Currently, the company manufactures the Model Y at its Berlin factory. Tesla’s move to export cars to India is the first instance of right-hand drive vehicles being produced in Berlin.

Usually Tesla’s Shanghai plant handles all the production for right-hand-drive cars for markets such as Australia and Japan. The production of RHD cars in Berlin factory is a completely new thing. Tesla prices are likely to start from Rs. 40 lakh.

Tesla’s interest in the Indian market has been evident for years, with CEO Elon Musk meeting Prime Minister Narendra Modi in 2023. Tesla is entering India at a critical time where it is facing stiff competition from Chinese players and slowed demand in its primary markets such as the US and China.

Tesla already imports parts from India and is now looking at reducing sourcing from China and making India a bigger sourcing hub,” the person added.

In addition to the manufacturing plant, Tesla plans to invest in a charging network in India. The charging infrastructure in India is still very weak and progress is slow. With the entry of Tesla, it is expected to develop at a faster pace and as chargers will grow, people will start adopting EVs. Furthermore, the company aims to reduce its reliance on Chinese sourcing. This will be done by increasing the sourcing from India.

Tesla is currently exploring potential factory locations in Tamil Nadu, Maharashtra, and Gujarat. It is expected that the company will start the construction within a time span of two years. The size of the EV market in India is quite small as it is a relatively new technology here. By the year 2030, government is targeting EVs to be about 30% of the total car sales.

In the year 2023, EVs comprised of only 2% out of the total sales. Tesla’s entry into India follows VinFast’s recent investment pledge of $2 billion and the construction of an EV factory in Tamil Nadu’s Thoothukudi district.

Via Reuters