Elon Musk-led Tesla has initiated the process of identifying land for establishing an electric vehicle (EV) manufacturing facility in India, with Maharashtra emerging as its primary choice, according to a report by The Economic Times quoting sources. Tesla has also reportedly reached out to executives at Tata Motors for a possible collaboration.
This development follows Musk’s recent meeting with Prime Minister Narendra Modi in the US. The report adds that Tesla is seeking policy incentives, including lower import duties on EVs, to facilitate its entry into the Indian market.
Why is Tesla considering Maharashtra for EV plant?
Maharashtra holds strategic significance for Tesla due to its existing presence in Pune, where the company has an office and several suppliers. Government officials have proposed potential sites in Chakan and Chikhali, both near Pune, which are prominent automotive hubs housing major manufacturers like Mercedes-Benz, Tata Motors, Mahindra & Mahindra, Volkswagen, and Bajaj Auto.
However, discussions remain ongoing, and Tesla is evaluating multiple factors before making a final decision. One key criterion is the site’s proximity to a port, which would facilitate logistics and exports. The Maharashtra government, meanwhile, remains cautious, having previously lost high-profile projects such as the Vedanta-Foxconn semiconductor plant and the Tata-Airbus aircraft project to other states. Given the competitive landscape, there is still a possibility that Tesla might opt for a different location.
Tesla’s hiring and expansion efforts
In a move signalling its renewed focus on India, Tesla recently advertised job openings on LinkedIn for 13 positions across vehicle service, sales, customer support, operations, and business development. These roles are based in Mumbai and Delhi, indicating the likelihood of Tesla launching sales showrooms in the country.
Additionally, Tesla has reportedly reached out to executives at Tata Motors, a leading EV manufacturer in India, possibly to explore collaboration opportunities. Senior executive Prashanth Menon, who previously headed Tesla’s India operations before being reassigned to the Netherlands in 2022, is expected to play a crucial role in the company’s India strategy upon his return, the report said.
Policy challenges and past setbacks
Tesla’s entry into India has been in discussion for several years. In 2021, the company had finalised plans for a showroom and office in Mumbai’s Lower Parel but shelved them due to the Indian government’s reluctance to reduce import duties on Tesla vehicles. The automaker had proposed lowering tariffs on fully assembled EVs costing under $40,000 from 60 per cent to 40 per cent, while committing to build a manufacturing plant in the country once market response was assessed. However, the Indian government rejected any tax concessions at the time.
In 2023, Tesla officials engaged with Modi’s administration regarding local component sourcing, followed by the company leasing office space in Pune. Musk’s subsequent meetings with Modi further fueled speculation about Tesla’s plans. In 2024, India introduced an updated EV policy offering duty relief for manufacturers willing to invest a minimum of $500 million. Musk was expected to announce investment commitments during a scheduled visit to India in April 2024 but cancelled the trip, citing pressing business obligations, and instead visited China.
With the Indian EV market expanding and policy frameworks evolving, Tesla’s interest in setting up a manufacturing base in the country remains strong. However, the final decision on the plant’s location will depend on negotiations with state governments and the overall business feasibility of the venture.
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