Representatives from American electric vehicle giant Tesla Inc. (NASDAQ: TSLA) are set to meet with the Indian commerce minister to discuss the possibility of building a factory to supply the Indian market with affordable EVs. According to a report from Reuters, this factory would manufacturer electric cars worth $24,000 for both the local and foreign markets.
An individual with direct knowledge on the upcoming meeting informed Reuters that this hypothetical low-cost EV would be an entirely new model. India is one of the most populous nations on the planet, and Tesla could be looking to capture most of the market before any another major automaker has the chance.
However, with electric vehicles typically costing much more than comparable gas-powered cars, most consumers in India would be unable to buy Tesla offerings at current prices. A low-cost EV, manufactured locally to reduce costs even further, could be what Tesla needs to attract Indian consumers.
The report comes several months after the Indian government refused to decrease import taxes levied on electric cars entering the country and instead asked automakers to pledge to manufacturing vehicles locally. On top of accelerating EV adoption in the country, carmakers building up local manufacturing capacity would be a major boon to the economy, creating hundreds to thousands of new jobs and potentially injecting billions into the economy.
A prior report from Reuters indicated that Tesla representatives had visited India and met with government officials to talk about building a manufacturing facility for cars and electric vehicle batteries in the country.
Last month, Tesla CEO Elon Musk had a meeting with India Prime minister Narendra Modi where he said that he would like to invest in the country. Musk said at the time that his company was looking to invest significantly in India, and it would be making a related announcement in the near future. He also noted that the country has the potential to build up significant renewable energy capacity, stating that the prime minister was also pushing for Tesla to invest in the country and promising that Tesla would be in India “as soon as humanly possible.”
The $24,000 (2 million rupees) electric vehicle that Tesla intends to build in India would be 25% less expensive than Tesla’s lowest offering, the Model 3 Sedan, which is currently going for $32,200 in China.
Just as in most countries, electric vehicles in India make up a very small part of the nation’s fleet of vehicles (less than 2%). An affordable EV will be instrumental to increasing EV adoption in India.
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