Moneycontrol

Budget 2021

Associate Partners:

  • SMC
  • Samsung
  • Volvo

Moneycontrol

Budget 2021

Associate Partners:

  • SMCSamsungVolvo

Why Tesla chose to set up shop in Bengaluru

Karnataka’s capital is also the EV capital of the country, with many companies already having R&D units in the city thanks to its huge talent pool. Proactive policies by the State’s governments in setting up an EV ecosystem may have also helped tilt the scales in favour of Bengaluru

January 13, 2021 / 12:42 PM IST
Source: Reuters

Source: Reuters

After several years of dilly-dallying, Tesla Inc has finally made its way to India with the setting up of its India subsidiary and a corporate office in Bengaluru. Karnataka Chief Minister BS Yediyurappa took to Twitter and welcomed Tesla chief Elon Musk to the State while declaring that the electric vehicle giant would set up a research and development (R&D) unit in Bengaluru.

The tweet, though, has been deleted.

With more than half a dozen automotive companies, Bengaluru houses one of the biggest clusters of technical and R&D centres in the country. Mercedes-Benz, Great Wall Motors, General Motors, Continental, Mahindra & Mahindra, Bosch, Delphi and Volvo have operational R&D units in Bengaluru.

The Karnataka government claims that more than 45 electric vehicle start-ups are based in Bengaluru, including Mahindra Electric, Ather Energy and Ultraviolette Automotive. Many of these are focussed on two-wheelers. Ola Electric, which recently announced its entry into the electric two-wheeler space, is also based in Bengaluru.

Setting up an R&D unit in India signals Tesla’s intention of benefiting from the extensive IT and engineering talent pool generated by the country. Auto companies have used the India R&D centre to work on projects not only destined for India but even those projected for the US, Europe and China.

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Talent pool and policy support in Karnataka

Software engineers at Mercedes-Benz Research and Development, Bengaluru, are working on projects such as driverless cars. China’s Great Wall Motors also started its R&D unit to work on electric vehicles in Karnataka’s capital. Apart from the IT and engineering talent available in the State, Karnataka’s policy towards the electric vehicle ecosystem may have attracted Tesla to Bengaluru.

Karnataka has allocated over $3 billion for the setting up of an electric vehicle hub, including EV manufacturing bases and a lithium-ion cell and battery manufacturing unit in Hubbali and Dharwad, 400 km from Bengaluru. The State also provides incentives such as 100 percent exemption on stamp duty, reimbursement of land conversion fee and an investment promotion subsidy, to name a few.

While Bengaluru has been traditionally known for its IT manpower, housing software giants Infosys, Tech Mahindra, Wipro and Accenture, other cities have been giving it a tough fight. Hyderabad and Chennai have attracted investments from auto companies for the setting up of R&D centres over the last few years.

Fiat Chrysler Automobiles (FCA) India has lined up a $150 million investment in setting up a global digital hub in Hyderabad. Hyundai Motor Group, which includes Kia Motors, has an operational R&D centre in Hyderabad. The Renault-Nissan alliance has a fledgling engineering and design centre in Chennai. France’s PSA Group has also set up an R&D centre in Chennai.
Swaraj Baggonkar
first published: Jan 13, 2021 12:42 pm

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