Elon Musk explores establishing Tesla’s supply chain ecosystem in India, says report

Citing government sources, the electric car-maker has engaged in talks with Indian officials to set up its auto parts and electronics chain in India, along with seeking incentives and tax benefits.

New Delhi: After meeting Prime Minister Narendra Modi in the US last month, Elon Musk is reportedly exploring setting up his own supply chain ecosystem in India, thus producing cheaper electric cars that might start from Rs 20 lakh.

As first reported by The Economic Times, citing government sources, the electric car-maker has engaged in talks with Indian officials to set up its auto parts and electronics chain in India, along with seeking incentives and tax benefits.

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If all goes well, Tesla can reportedly produce 5 lakh electric vehicles annually that starts from Rs 20 lakh.

Currently, a standard Tesla electric car starts from more than Rs 30 lakh and with 100 per cent customs duty, the price goes up to over Rs 60 lakh.

There are, however, initial talks between the Indian government and Tesla and may take some time before a Tesla facility arrives in the country.

Tesla is also conducting meetings with industry executives in India, the report noted.

Last month, after hearing Prime Minister Modi’s ‘Make in India’ pitch, Musk announced a change of plans, saying that his electric vehicle and battery company will now come to India “as soon as it is humanly possible”.

Musk told reporters in conversations following his meeting with Modi: “He really cares about India because he’s pushing us to make significant investments in India, which is something that we intend to do and we’re just trying to figure out the right timing.”

It was a change of plans for the mercurial Musk who had earlier refused to consider manufacturing in India unless India lowered tariffs for imported Teslas to be sold in India.

Modi “really wants to do the right thing for India,” he said.

Modi wants to make sure that the advantage from investments “accrues to India’s advantage, which is, you know, obviously, that’s the job”, he added.

India has more “promise than any large country in the world”, Musk said.

If Tesla comes to India, it will be following the pattern of companies like Apple diversifying their manufacturing from China because of geopolitical and supply chain issues.