Tesla’s Berlin factory kicks off production for Indian market

Tesla, the world’s leading Indian electric vehicles (EV) manufacturer, has begun the process of producing right-hand drive cars for the Indian market in its Berlin factory and hopes to have them on Indian roads later this year, a person familiar with the company’s plans said on Wednesday.

Tesla is also sending a team in the third week of April to India to scout for locations to firm up its mega manufacturing plans to make vehicles in India for the wider developing world.

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The person cited above confirmed that the company has got to work on both the export and manufacturing dimensions of its plans after the government of India announced its new EV policy last month. The new policy reduced custom duties on EVs, but linked it to a simultaneous manufacturing investment commitment above a certain threshold, within a specified time period, and with a strong localisation component.

HT first reported, on January 13, that India was on the verge of announcing a new EV policy with an eye on attracting global majors such as Tesla, and getting a foothold in the EV and battery industry to meet its climate, economic and strategic objectives. The policy was released a day before the code of conduct kicked in for the elections, showing the importance the government attaches to the sector. On Wednesday, FT first reported that a Tesla team would travel this month to India to scout for manufacturing locations.

The person familiar with the company’s plans said that Tesla is considering Gujarat, Maharashtra or Tamil Nadu as the site for its plant, primarily because these are coastal states with ports. Tesla, the person confirmed, is looking to make what will possibly be the largest foreign direct investment (FDI) in India. This may, tentatively, include a direct and immediate investment of $3 billion to produce a new small car from an Indian plant, a $10 billion commitment from other partners to support this manufacturing venture, and a cumulative $15 billion in the battery industry ecosystem.

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Simultaneously, Tesla has started production of a limited number of its standard brands to compete in the Indian market in its factory in Germany, a step that will also help the company build and test a charging ecosystem. Advocates of the project believe that Tesla’s investment is both a “Suzuki moment” for India’s EV industry as well as an “Apple plus moment” for India’s manufacturing aspirations.