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Karnataka government unveils EV sops in bid to woo Elon Musk's Tesla

The state government is in talks with Tesla to set up an R&D Hub as well as a manufacturing base.

May 27, 2021 / 09:30 PM IST
Tesla [Image: Reuters]

Tesla [Image: Reuters]

Karnataka has upped the ante in its efforts to woo Elon Musk's Tesla, as it unveiled two new incentives in its Electric Vehicle policy, months after the world's largest EV maker opened a fully-owned subsidiary in Bengaluru.

The state government is in talks with Tesla to set up an R&D Hub as well as a manufacturing base. The carmaker is also looking to set up showrooms in cities such as New Delhi, Mumbai and Bengaluru.

Karnataka was one of the first states to adopt an EV policy called Karnataka Electric Vehicle and Storage Policy back in 2017 which gave the necessary impetus to the electric mobility sector and attracts investments.

According to a note from the state government, the new incentives approved include

15% capital subsidy on Value of Fixed assets over five equal annual payments with maximum land covered under this incentive being 50 acres, and


production linked incentive of one percent of turnover for a period of five years from the first year of commercial operations.

With these incentives the government hopes to attract more investments in the electric vehicle sector and position Karnataka as one of the leading destination for electric vehicles. These measures also come at a time when homegrown EV players such as Ather Energy and Ola Electric have opted to set up their factories in Tamil Nadu.

​Analysts tracking the space welcomed the move. Gaurav Vangaal, associate director, IHS Markit said “A welcome move and it's good to see that Indian states are competing to attract EV investment tThings are still moving slowly but the good part that the general acceptance towards EV has started.

He added that Karnataka, with its reputaion as a startup and software hub will be more inclined to change and adapt polciies to facilitate new technologies.

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Payaswini Ranganath
first published: May 27, 2021 09:28 pm
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