Prime Minister Narendra Modi’s September tour of a Tesla Motors plant in Palo Alto with CEO Elon Musk sent out a clear message to the Indian market: that Tesla might soon be entering the country.
Now a report by CNBC-TV18 claims that Tesla is considering building an assembly unit in India.
The world’s most famous electric car-maker also designs, manufactures and sells power train components and battery products. In fact, Modi had shown interest in Tesla’s power train energy storage component during the tour.
Musk, reportedly, showed interest in the ‘Make in India’ pitch.
The report says that Tesla is planning to build this assembly unit for its Model 3 variant of cars.
The sedan is currently assembled in Netherlands and sold in the European market.
One major reason why Tesla is unable to sell its cars in India is the high import duty, which almost doubles the original price of the car making it go beyond the reach of a prospective buyer.
The Model 3 is priced between $30,000 and $40,000. If pans proceed accordingly, the car is likely to be launched by late 2016 or early 2017.
It is learnt that the company is also in talks with the government to rationalise import duty on electric cars.
There is a difference between an assembly unit and a manufacturing unit. An assembly unit is engaged only in assembling a product or a part of it. The parts are manufactured elsewhere. A manufacturing unit is more expansive in operations and might involve transfer of technology.
If the assembly unit gets a green signal, it is very likely that Tesla will follow it up with a full-fledged manufacturing unit.
This would mean that India will become Tesla’s gateway to Asia. The report says that Tesla is conducting an initial market research to understand whether India can become a hub.
China and Japan are the only two Asian countries where Tesla has a presence – the Model S is sold in these markets.
The Model S and the Model X are produced in California. Tesla did not comment on speculations regarding it production plans.