India gets closer than ever to Tesla with lower production costs
India gets closer than ever to Tesla with lower production costs

Indian Transport Minister Nitin Gadkari told Reuters in India that if Tesla committed to manufacturing electric cars in South Asian countries, he would be prepared to offer incentives to ensure that Tesla's production costs are lower than in China.

Weeks after billionaire Elon Musk scored a deal in India (most likely in India in mid-2021), Jadkari made the offer.

A person familiar with the matter told Reuters that Tesla plans to import and sell Model 3 electric vehicles in India.

"The product should be fully assembled in India, not in India, but it should be signed with local suppliers and then big concessions should be made without giving details of the incentives," said Jad Curry in an interview.

"The government is impatient for Tesla to start producing cars in India with the lowest production cost in the world, even in China," he added.

India hopes to encourage local production of electric cars, batteries and other parts to cut costly imports and reduce pollution in its major cities.

As countries work hard to reduce carbon dioxide emissions, global automakers have started producing electric cars.

India's emerging electric vehicle market accounted for only 5,000 of the 2.4 million cars sold in the country last year as the limited charging infrastructure and high cost of electric vehicles prevented buyers from doing so.

In contrast, China, where Tesla produces cars in China, sold 1.25 million new energy vehicles, including electric cars, in 2020, and total sales of that car reached 20 million, which is more than a third of Tesla's global sales.

India does not yet have a comprehensive electric vehicle policy like China, the world's largest auto market, which requires companies to invest in this area.

Not only could India become a big market, but also an export hub, Gadkari said, especially since around 80% of lithium-ion battery components are now locally made.

“I think this proposal is beneficial to everyone, and he also hopes to do business with Tesla to create a high-speed loop between Delhi and Mumbai,” he added.

India is in the process of developing a production-related incentive scheme for auto and parts manufacturers and setting up a sophisticated battery manufacturing division. However, the details have not been revealed yet.

Moving to cleaner energy sources and reducing vehicle pollution is essential for India to fulfill its climate commitments in the Paris Agreement.

India last year imposed stricter emissions regulations on carmakers to bring them up to international standards.

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