India wants to lure Tesla by offering cheaper production costs than China

As part of an effort to boost Indian production capacity the country’s transport minister has made a bold offer to US electric car maker Tesla: the cheapest manufacturing cost in the world, even lower than China.

According to Nitin Gadkari, Indian authorities would give higher concessions, if the electric vehicle (EV) pioneer started making the entire product in the country, hiring local vendors, instead of just assembling the cars.

“The government will make sure the production cost for Tesla will be the lowest when compared with the world, even China, when they start manufacturing their cars in India. We will assure that,” Gadkari said in an interview with Reuters.

The offer comes several weeks after the government of the country’s south eastern state of Karnataka revealed that Tesla was planning to set up an electric-car manufacturing unit in the region. The company reportedly incorporated Tesla Motors India and Energy Private Limited with its registered office in the state capital of Bengaluru.

Gadkari added that India could become an export hub for Tesla’s products, highlighting that some 80 percent of components for lithium-ion batteries are currently being made locally.

India’s EV market is in the early stages of development. Just 5,000 out of a total 2.4 million cars purchased in the country in 2020 were electric.

Competition with China, where Tesla already produces cars, is expected to be tough. Last year, a reported 1.25 million new energy passenger vehicles, including EVs, were sold in China, out of the total sales of 20 million cars. Moreover, China accounted for more than a third of Tesla’s global sales.

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