Tesla zeroes in on 3 states for potential manufacturing unit: Reports

The company has engaged in multiple discussions to find a local partner, particularly considering a manufacturing site in Pune.

Maharashtra, Tamil Nadu and Gujarat are leading the race for Tesla’s potential manufacturing unit, the Business Standard has reported amid talks of Elon Musk’s company putting its India investment plans on hold.

The final decision will likely hinge on Tesla's product strategy and local partnerships, the report quoted sources as saying.

If Tesla aims to focus on a low-cost model for the domestic market, Maharashtra could be the preferred location.

Conversely, Tamil Nadu may be selected if the emphasis shifts to exporting vehicles, thanks to its well-established automotive ecosystem and port access.

Gujarat remains a potential option, contingent on securing substantial subsidies from both state and the Centre to offset logistics costs, the report said.

Moneycontrol couldn’t verify the report independently.

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The electric vehicle maker has engaged in multiple discussions to find a local partner, particularly considering a manufacturing site in Pune.

Maharashtra’s proximity to key sales regions like Mumbai and the National Capital Region (NCR) makes it an attractive choice for targeting domestic buyers.

Tamil Nadu’s advantages include its robust infrastructure and port facilities, which support export-focused strategies.

Despite these considerations, Tesla’s India plans have faced delays. Reports suggest that Musk’s team has not pursued further discussions with Indian officials after he put off his India visit in late April. The slowdown is attributed to capital issues within Tesla and a strategic re-evaluation of its Indian investments.

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Tesla’s global performance has also been under pressure, with deliveries falling for the second consecutive quarter in June due to stiff competition in China and sluggish demand for its existing models. Its new Cybertruck, too, got a tepid response.

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Tesla’s competitor VinFast has already chosen Tamil Nadu for its operations, benefiting from quicker import and export processes.

The Indian government has incentivised such investments by reducing taxes on imported electric vehicles to 15 percent for cars priced at $35,000 or above, provided that companies commit $500 million in investment and establish a manufacturing plant within three years.