Home / News / India /  Tesla plans India entry next year

Tesla Inc. co-founder and chief executive Elon Musk on Friday said that the California-based electric vehicle (EV) and clean energy company will enter the Indian market in 2021.

“Next year for sure," Musk said while replying to a query on Tesla’s India plans on Twitter. He did not elaborate.

While the serial entrepreneur and multi-billionaire had earlier criticized India’s restrictive taxes on vehicle imports, this is not the first time he has shown interest in setting foot in the subcontinent.

Last year, Musk had tweeted that high duties on vehicles imported as completely built units (CBUs) in India hindered the company’s entry in this market. Low per capita income and lack of infrastructure for EVs also influenced the company’s decision.

“I am told duties are extremely high in India (up to 100%) even for electric cars. This would make our cars unaffordable," Musk tweeted last year. This followed Musk’s tweet in 2017 wherein he said: “In discussions with the government of India requesting temporary relief on import penalties/restrictions until a local factory is built."

EVs imported as CBUs currently attract a 40% duty, while it is 30% for those imported as semi-knocked down units (SKDs) and 15% for completely knocked down units (CKDs). Also, in a bid to attract foreign investments in EV technology, the goods and services tax (GST) on such vehicles has been cut to 5% from 12% earlier.

Developing India as a global hub for EVs is one of the prime agendas for the government led by Prime Minister Narendra Modi. Five years ago, Modi had undertaken a tour of Tesla’s factory in Fremont, California.

Some industry executives said that Tesla’s foray into India could be in the form of a captive research & development (R&D) unit instead of selling electric cars as CBUs or setting up an assembly unit for EVs.

This could range from setting up a captive centre for the development of software modules on automotive electronics to some early discussions with the government on battery or energy storage areas.

Several global automobile and auto parts makers such as Mercedes-Benz, Ford Motor, Bosch and Continental have development centres in India.

“Tesla could be looking at India for setting up a captive R&D centre where it could reap benefits of local competencies around software development and coding related work on global programmes, CAE and CAD simulations, modules for autonomous driving among others," said Suraj Ghosh, principal analyst, powertrain forecast, IHS Markit.

Tesla is in talks with the Karnataka government to build an R&D centre in Bengaluru.

NITI Aayog, the Union government’s policy think tank, is working with various ministries to develop India’s own EV battery manufacturing ecosystem, including Giga factories for lithium-ion batteries. The government is also working on a separate scheme to promote manufacturing and exports of lithium-ion cells from India.

Meanwhile, the central government had last year earmarked 10,000 crore to encourage the development, manufacturing and adoption of EVs through the second phase of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme.


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