India Woos Tesla With Cheaper Domestic Production Costs: Reuters

India offered incentives to Tesla Inc (NASDAQ: TSLA) to produce electric vehicles (EVs) to compete with China’s cost of production, Reuters reports.

• The offer is preceded by CEO Elon Musk’s registration of a company in India in a bid to enter the country by mid-2021. Tesla reportedly intends to commence the import and sale of its Model 3 electric sedan in India.
• India’s concessions were aimed towards encouraging complete domestic production via local vendors of the vehicles instead of part assembly. The country assured a lower cost of production compared to China upon the commencement of domestic manufacturing. India wants to boost local production of EVs, batteries, and other components to reduce expensive import costs and pollution.
• India accounted for just 5,000 EVs out of a total of 2.4 million cars sold in the country last year due to the absence of charging infrastructure and expensive EV pricing. At the same time, China sold 1.25 million new energy passenger vehicles, including EVs, out of total sales of 20 million. China accounted for over a third of Tesla’s global sales.
• India also lacks a comprehensive EV policy like China, the world’s biggest auto market, with mandates towards sector investment.
• The country exudes the potential to become an export hub, as it presently accounts for 80% of the domestic production of components for lithium-ion batteries.
• India is charting out a production-linked incentive scheme for auto and auto component makers setting up cutting-edge battery manufacturing units.
• The migration to cleaner energy sources and reducing vehicle pollution is vital to accomplish India’s Paris Accord climate commitments.
• India introduced stricter emission rules for carmakers last year to be at par with international standards. It is looking forward to toughening fuel efficiency rules from April 2022, which could induce some automakers to add electric or hybrid vehicles to their portfolios. However, the transition will get delayed due to the pandemic.
• Related News: Why Tesla Will Find Indian Auto Market A Tough Nut To Crack
• Price action: TSLA shares were down 0.4% at $715.5 in the pre-market session on the last check Tuesday.
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