Tesla team meets PMO, MoRTH officials, show serious interest in India as EV market: Sources

Tesla is the world's leading EV producer (Reuters file image)

Top executives of Tesla Inc, the electric vehicle giant headed by billionaire Elon Musk, met officials of the Prime Minister's Office (PMO), Ministry of Road Transport and Highways (PMO), and Ministry of Heavy Industries in New Delhi on May 17, CNBC TV-18 reported.

The Tesla team held a series of meetings with the ministry officials, and showed "serious interest" in India as a market for electric vehicles, the persons privy to the development told the news channel.

The company, which so far has a manufacturing presence in the United States, China, and Germany, is considering setting up an additional manufacturing plant, with India being looked into as one of the possible locations, the sources told CNBC TV-18. Tesla is considering "one or two countries as the possible locations", they noted.

A source told news agency Reuters that Tesla made a proposal for setting up a factory in India to build electric cars for domestic sale and export. A confirmation on this, however, was awaited.

The Tesla executives conveyed concerns to the Indian officials on "taxation and duties", which were the friction points that led to the derailment of the previous rounds of talks between New Delhi and the Musk-led EV firm in 2022, CNBC TV-18 reported.

As a follow-up to the discussions held today, the visiting Tesla executives will be meeting Union Road Transport Minister Nitin Gadkari on May 18, Moneycontrol has learnt.

The delegation has discussed the possible local sourcing of components and incentives but stopped short of proposing to build vehicles in the country, people familiar with the matter said, after the electric carmaker reopened dialogue with the government after a year-long impasse.

While the automaker will eventually look to establish a domestic factory to tap India’s vast consumer market, it hasn’t yet presented a formal plan, the people said, asking not to be identified because the matter is private.

Also Read | Ahead of Tesla team's India visit, a look at EV maker's manufacturing presence worldwide

Last year, Tesla had sought a reduction in import duty levied by the Indian government on electric vehicles. Tesla's cars, priced above $40,000, attract 100 percent import duty in India, and the cheaper ones draw a duty of 40 percent.

India had earlier refused to lower the duties but said it would be interested if Tesla sets up an automobile manufacturing unit and provided employment in the country.

Also Read: India welcomes Tesla and other EV Investments as long as the vehicles are made in India: Nitin Gadkari

A government official privy to the fresh round of discussions with Tesla told Moneycontrol earlier today that the government will carefully consider what the carmaker is offering for the Indian market.

"We will listen to what they are offering for the Indian market, which is huge. Their plan must have something to benefit the Indian market,” the official had said, ahead of the meeting.

Any concession that the government decides on will not be exclusive to Tesla, but will be for the entire EV sector, he pointed out. These concessions could be on the basis of the project, the timelines, and value-additions, the official added.

A Bloomberg report had, on May 16, claimed that the purpose behind the Tesla team's visit to India is to explore opportunities to enhance the carmaker's supply chain in the country as it seeks to expand beyond China. The discussions will revolve around the possibility of local sourcing of components for Tesla's car models, the news agency reported, citing sources.