Putting an end to all speculations, Elon Musk, CEO of the American electric car maker Tesla, confirmed his upcoming visit to India in a recent post on X (formerly Twitter).

Sources report that Musk’s visit is anticipated for the week of April 22, and other company executives are expected to join him. However, Musk himself hasn’t confirmed this information.

In June of the previous year, Musk had a meeting with Modi during the latter’s US visit, where he expressed his intention to visit India in 2024 and his confidence in Tesla’s imminent entry into the Indian market.

Musk’s visit coincides with the government’s recent announcement of a new electric vehicle policy. The policy offers import duty concessions to companies establishing manufacturing units in India with a minimum investment of USD 500 million.

It’s a strategic move by India aimed at attracting major global players like Tesla.

Under this policy, companies setting up manufacturing facilities for electric vehicle passenger cars will enjoy lower customs/import duty, set at 15% for vehicles priced at USD 35,000 and above.

The concession will be applicable for five years from the issuance of the approval letter by the government. Currently, cars imported as completely built units (CBUs) attract customs duty ranging from 70% to 100%, depending on various factors.

The ultimate goal of this policy is to position India as a manufacturing hub for electric vehicles and entice investment from renowned global EV manufacturers.

The Question Of Import Duties
Tesla had previously approached the Indian government seeking duty cuts to import its vehicles.

In 2022, Musk had stated that Tesla wouldn’t manufacture its products in India unless it was permitted to first sell and service its cars in the country.

Moreover, in August 2021, he mentioned the possibility of Tesla establishing a manufacturing unit in India, contingent upon the success of imported vehicles in the country. He cited high import duties as a significant challenge, stating that they were the highest globally among large countries.

The Mukesh Ambani, Reliance Connection
As the possibility of Tesla entering the Indian market has gained significant traction, recent developments hint at discussions between the company and Mukesh Ambani’s Reliance Industries.

Sources indicate that talks are underway for a potential joint venture aimed at establishing a manufacturing facility in India for the leading US electric vehicle company.

These discussions, ongoing for over a month, signify a potential collaboration focused on developing electric vehicle capabilities in India, rather than marking RIL’s direct entry into the automotive sector.

While the specifics of RIL’s role are yet to be finalized, it’s expected that the Indian conglomerate will play a substantial part in setting up the manufacturing facility and associated ecosystem for Tesla in India.

Elon Musk has expressed the necessity for India to embrace electric vehicles, highlighting the country’s status as the most populous in the world.

He sees it as a natural progression for Tesla to offer its electric vehicles in India, as he discussed during a session on X (previously Twitter) Spaces with Nicolai Tangen, CEO of Norges Bank Investment Management.

Reports suggest that states like Maharashtra and Gujarat have proposed appealing land options to Tesla for establishing an electric vehicle (EV) manufacturing facility.

Discussions are also underway with the Telangana government for a similar arrangement. The proposed facility, requiring an investment of approximately $2 billion to $3 billion, aims to cater to both domestic and international demand for Tesla’s electric vehicles.

Furthermore, recent reports have indicated that Tesla is commencing right-hand drive vehicle production in Germany and targeting export to India later this year, signalling its progress toward potentially entering the world’s third-largest automotive market.

India EV Story So Far
India’s electric vehicle (EV) market, although relatively modest in size, is witnessing steady growth, led by domestic automaker Tata Motors.

Electric vehicle sales accounted for 2% of total car sales in 2023, a figure the government aims to increase to 30% by 2030.

Additionally, VinFast, a Vietnamese competitor to Tesla, has announced plans to invest $2 billion in India and has begun constructing an EV factory in Tamil Nadu state.

Tesla China Success
In March, Tesla experienced a notable surge in electric vehicle (EV) sales in China, with figures doubling to reach 62,398 units, according to data released by the China Passenger Car Association (CPCA).

This significant increase contributed to the US EV maker’s total sales of 132,420 vehicles in China during the first quarter, accounting for 34.23 percent of its global sales.

Specifically, Tesla sold 89,064 vehicles manufactured in China in March, including 26,666 units exported, marking a substantial rise from the previous month. Sales in March surged by 107.02 percent compared to February’s figures.

However, there was a slight decline of 18.61 percent compared to the same period last year.

Tesla’s operations in China primarily revolve around its factory in Shanghai, where it produces the Model 3 sedan and Model Y crossover.

These vehicles are distributed both to local customers and for export purposes. Tesla follows a production pattern where cars are manufactured for export in the first half of the quarter and for the domestic market in the latter half.

The disruption caused by the Chinese New Year holiday, which fell between February 10-17 in 2024, significantly impacted February’s car deliveries. In comparison, the holiday period in the previous year was observed from January 21-27, 2023.

Despite the overall industry’s positive performance in March, with retail sales of new energy vehicles (NEVs) reaching 709,000 units, up 30 percent year-on-year and 83 percent from February, Tesla’s share of China’s NEV market slightly decreased to 8.8 percent in March.

Nonetheless, China remained a significant contributor to Tesla’s global deliveries, comprising 34.23 percent of its total deliveries in the first quarter.

As Tesla continues to thrive in China’s EV market, the question is – can India achieve a similar level of success?