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Tesla in talks to start production in India with new factory proposal, report says

Tesla in talks to start production in India with new factory proposal, report says
This is not the first time Tesla is discussing its plans to expand its foot in India.


American electric vehicle maker Tesla is in talks with government officials to start production in India, Reuters reported citing unnamed sources. The automobile company has proposed setting up a production facility in the country for the domestic sale and export of its electric cars, the report added.


The company proposed setting up a new factory in the country to Indian officials but did not mention details about any location or investment. Tesla also did not discuss lower import taxes, one of the main issues for the deadlock between the company and Indian officials last time. Another Reuters report highlighted earlier this week the visit of Tesla executives to meet Indian authorities and discuss local procurement of its vehicle’s parts and other issues.


Additionally, Tesla executives met officials from Prime Minister Narendra Modi’s office and other ministries on Wednesday. However, there is no official confirmation from both parties yet.


This is not the first time the company is discussing its plans to expand its foot in India. In the past, Tesla chief executive officer Elon Musk has shown enthusiasm for bringing Tesla vehicles to India and acknowledged that the EV maker was thinking about opening a factory in the country last year. Tesla took a significant step towards entering the Indian market and established a subsidiary in the country in 2022. As part of this move, the automobile manufacturer also registered an office in the southern Indian city of Bengaluru.


However, in May last year, the company said to put a hold on its expansion plans in the country after it failed to secure lower import taxes from the government. Following this, Tesla abandoned a search for showroom space and reassigned some of its domestic team, Reuters reported.


At that time, the Indian authorities insisted that the American company start opening a manufacturing facility in the country and assemble its cars locally. Until then, the EV maker was asked to pay high import tariffs which reportedly run as high as 100% on imported vehicles. Tesla, on the other hand, sought lower taxes and demanded to first test the demand in the country by selling its cars imported from its existing production hubs in the U.S. and China.


While Musk has mentioned in the past the high potential of the Indian market and the importance of sustainable transportation solutions, he also made it clear that Tesla “will not put a manufacturing plant in any location where we are not allowed first to sell & service cars.”


Meanwhile, last month, Tesla raised its capital expenditure forecast for 2023 to up to $9 billion, which is revised for the second time in 2023 and is most likely made as the company seeks to reach a bold goal of selling 20 million vehicles by the end of the decade. The EV maker now expects to spend between $7 billion and $9 billion this year, up from the previous outlook of $6 billion to $8 billion spending.

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