Tesla Being Courted To Invest By Multiple States In India

“We are firmly committed to policy building and changes for sustainable development and I personally believe that electric mobility, supported by renewable energy is the way ahead. Let's hope we can help this thought become mainstream soon,” added the son of Maharashtra's chief minister. 

Now Thackeray is not the first one to court Tesla. This news comes after it was revealed that Tesla was contemplating investing in Karnataka for an R&D centre in Bangalore as it wanted to leverage the IT talent pool of the region which is home to tech majors like Microsoft, Infosys, Google, Amazon, IBM and Xiaomi. 

At its recent earnings report, Elon Musk didn't mention anything about a potential investment in India but did say that he wanted to achieve 20 million vehicles by 2030. This number wouldn't be simply possible without the world's fourth-largest automotive market and second-largest population. 

Tesla has also announced plans to develop a $25,000 hatchback which will be designed in its Chinese Gigafactory. But there are more interesting signs that Tesla may be preparing for an imminent launch in India as per a CNBC report. 

“We have channel checks from a couple of months back that indicates the entry into the Indian market is a very high probability for 2021, with a probable announcement in late 2020,” said Craig Irwin of Roth Capital to CNBC. “Tesla is in the process of selecting a site for a manufacturing facility in India,” said the analyst indicating a launch by the end of 2020. 

Another analyst, David Whiston, from Morningstar equity, has also stated that Tesla may not have the regulatory issues that it had earlier. “For Tesla, it's different this time because they have more money than they've ever had and with the [Model] 3 and Y out, Musk may have more time to focus on expanding there [India],. If Musk “wants to do it and can get a good relationship with [Indian Prime Minister Narendra] Modi as he has with the Chinese government then it's more likely to work out,” said Whiston. 

Vivek Wadhwa was also cited in the CNBC report. He has been reportedly exchanging emails with Musk for years about India and seemingly, the billionaire has expressed a desire to expand into India. “There is no better time than now, given that his battery costs have dropped and he is expanding his manufacturing capabilities,” said Wadhwa, author of The Driver in the Driverless Car: How Our Technology Choices Will Create the Future.

India's technology thinks tank Niti Aayog recently shared a proposal for offering incentives of $4.6 billion to companies which are setting up advanced manufacturing facilities. This proposal is being reviewed by the government and if it goes through India could be ripe for Tesla as it is fishing for manufacturing facilities to make more batteries. It is even looking at Indonesia for the same purpose. 

It also helps that India is a huge market. “India will be as big as China, and maybe even bigger as there are no trade or geopolitical conflicts impacting the background,” said Roth Capital's Irwin Told CNBC. This challenge is riddled with the fact that mostly, India is an affordable car market and even the recently announced $25,000 Tesla will blow past the financial ability of the average Indian. 

Though for Tesla, it can wait and bide its time as now it needs to scale fast. Even if it can't sell many Tesla's to Indians, it can use India as a manufacturing hub while the market matures leveraging its cheap labour, developed auto parts ecosystem. “The demand picture has changed and now with Giga 3 build-out in China, Berlin and Austin, India is next,” he said, pointing to EV demand and the population growth in India as indicative of a massive market,” said Dave Ives of Wedbush securities who claimed that in five years India will represent 10 per cent of the demand for the company.