Elon Musk plans a maiden visit to India, hinting at Tesla's entry amid the country's growing EV market and favourable policies
Billionaire tech magnate Elon Musk is set to make his maiden trip to India on April 21 and 22, creating a buzz of excitement throughout the country. The highlight of this much-anticipated trip is Musk’s meeting with Prime Minister Narendra Modi, which has garnered significant attention from business and tech enthusiasts nationwide. Musk is reportedly exploring the possibility of launching operations for his electric vehicle (EV) company, Tesla, during his visit.
Following the announcement of Musk’s visit to India, an anonymous official hinted that the US-based electric vehicle (EV) manufacturer may reveal plans for its entry into the Indian market during the trip. However, rather than announcing specific site locations, the company may need board approval for such details, which could be revealed later.
In 2023, there were strong indications that Tesla would set up its inaugural manufacturing plant in Gujarat, India, by 2024. Final negotiations were underway, with an official announcement was expected at the January 2024 Vibrant Gujarat Summit .
Ahead of the Vibrant Gujarat Summit, there was speculation that Gujarat’s favorable business environment and promising locations like Sanand, Becharaji, and Dholera aligned well with Tesla’s export-oriented strategy for its potential plant site. However, reports indicated that a senior government official stated Elon Musk was not expected, and some speculated Musk might have chosen to skip the summit.
Currently at the second attempt of Musk’s arrival, the official further stated, “At present, Musk is likely to acknowledge the EV policy positively and express anticipation about entering the Indian market soon.”
Earlier this month, Musk confirmed his upcoming visit to India and his meeting with Prime Minister Narendra Modi through a post on X earlier twitter, the microblogging platform he currently owns.
Looking forward to meeting with Prime Minister @NarendraModi
in India!— Elon Musk (@elonmusk) April
10, 2024
EV Market in India
In recent years, the electric vehicle (EV) market in India has seen exponential growth, encompassing the introduction of new EV models, expansion of charging infrastructure, and advancements in EV technology.
According to Mordor Intelligence report the India Electric Vehicle Market size is estimated at USD 34.80 billion in 2024, and is expected to reach USD 110.74 billion by 2029, growing at a CAGR of 26.05% during the forecast period (2024-2029).
India is fervently embracing this shift towards EVs, opting for environmentally conscious living. This proactive move has not only revolutionised the automotive industry in India but also catalysed a shift in mindset towards sustainability.
For Tesla, as a leading EV manufacturer, it is high time to establish a foothold in one of the world’s largest consumer markets, India.
Tesla has been in extended talks with India government
Tesla CEO Elon Musk has stated that the company will not establish a manufacturing plant in India unless it is allowed to sell, and service imported cars in the country first earlier in 2022.
This indicated a fuss between India and Tesla regarding the establishment of a manufacturing plant in the country.
In April 2022, Union Minister for Road Transport and Highways, Nitin Gadkari, emphasised the favorable conditions for automobile manufacturing in India and welcomed Elon Musk to produce e-vehicles in the country.
However, Gadkari also noted that if Musk wishes to manufacture in China and then sell the vehicles in India, it would not be a “good proposition” for India.
Gadkari urged Tesla to come to India and manufacture there, citing the tremendous growth in the e-vehicles sector in India over the last few years.
Earlier in March 2024 India has unveiled plans to reduce import duties on specific electric vehicles for firms promising a minimum of $500 million in investments and setting up manufacturing units within three years.
This decision resonates with Tesla’s advocacy for a reduction in import tariffs, which CEO Elon Musk claimed to be among the highest globally. While Tesla has been pushing for this policy change in New Delhi, the government was reluctant to agree unless Tesla committed to local production.
Companies fulfilling the investment and manufacturing criteria will be permitted to import a limited quantity of EVs at a reduced tax rate of 15% on vehicles price. Currently, India imposes a tax ranging from 70% to 100% on imported cars and electric vehicles based on their value.
Tesla in India, how it will benefit Elon Musk and India?
The talks between Tesla and the Indian government have garnered significant attention over the years. Both entities are actively engaged in discussions to facilitate Tesla’s entry into the Indian electric vehicle (EV) market.
The year 2024 is an election year, and if Tesla enters the Indian market, it will signify one of the most significant foreign brands stepping into India. This move aligns with the business-friendly image of the Modi government, which has long been inviting foreign companies to invest in India and generate employment.
The long-awaited entry of Tesla and Musk’s visit ahead of the elections could potentially sway the election results in favour of the Modi government.
Previously, Musk criticised India’s high import tax rates, which he considered among the world’s highest. It appears Musk has now agreed to invest at least $500 million in India and establish local manufacturing, however reports claim Musk might have agreed over a billion dollars.
If the high import tax, ranging from 70% to 100%, wasn’t Musk’s main obstacle, he would probably have entered the Indian market much sooner, as per reports.
Thus, Tesla’s entry into India is expected to influence the country’s Foreign Direct Investment (FDI). According to Invest India, the total FDI inflow for the fiscal year 2023-24 is $17.96 billion, with FDI equity inflows reaching $11.54 billion.
The top five countries contributing to FDI equity inflows in India for FY 2023-24 are Mauritius (26%), Singapore (23%), the USA (9%), the Netherlands (7%), and Japan (6%). The automobile industry, with a 5% FDI equity inflow in FY 2023-24, ranks among the top five sectors.
Tesla to cut global workforce amid market challenges?
Also, there has been news that Tesla CEO Elon Musk has revealed plans in a memo to cut more than 10% of the company’s worldwide workforce, citing declining sales and increasing competition in the electric vehicle market.
The layoffs will predominantly impact sales personnel and technicians across various U.S. service centers, and some locations will let go of their entire front-of-house teams. A California program manager shared on LinkedIn a list of over 140 employees, primarily engineers, who are now looking for new employment opportunities.
Tesla’s sales team in China is also being informed about the impending job reductions. This moves underscores Tesla’s commitment to optimising operations and responding to evolving market dynamics by prioritising and investing in India, one of the world’s largest consumer markets and affordable labour.
With India’s burgeoning electric vehicle sector and Tesla’s global prominence in the EV industry, the anticipated collaboration has the potential to reshape the automotive landscape in India and drive sustainable growth.
