Tesla’s India Foray in Doubt as Political Landscape Shifts | if Current Government Doesn’t to Power

Dew Briefs:

It was in the news for a long time that Tesla plans to send a team to a proposed $2 billion to $3 billion electric car plant, focusing on states like Maharashtra, Gujarat, and Tamil Nadu.

Reason: India recently reduced import taxes on certain EVs for automakers committing to invest at least $500 million.

April 11, 2024, Charles Liu, a senior fellow at the Taihe Institute, also highlights concerns regarding Tesla’s decision to build a factory in India. He points out three main areas of worry:

• the lack of a robust supply chain and infrastructure
• shortage of skilled engineers and workers
• negative business environment.

Global Times /X , 11.04.2024

According to Charles Liu, senior fellow at the Taihe Institute, highlights concerns regarding Tesla’s decision to build a factory in India, GlobalArena:

Lack of Supply Chain and Infrastructure:

• India’s infrastructure, including transportation networks and power supply, may not be sufficiently developed to support Tesla’s manufacturing needs.
• Establishing a reliable supply chain for components and materials could be challenging due to logistical limitations and inadequate infrastructure.

Lack of Skilled Engineers and Workers:

• While India has a large workforce, there may be a shortage of workers with the specialized skills required for manufacturing electric vehicles.
• Tesla may need to invest in training programs or attract talent from abroad to address this gap, which could add to operational costs and time to market.

Negative Business Environment:

• India’s regulatory environment and bureaucratic processes may pose obstacles for Tesla.
• Complex regulatory compliance, bureaucratic red tape, and potential legal disputes could impact Tesla’s operations and profitability in the Indian market.

Overall, considering these challenges, Tesla should carefully assess the risks and benefits of building a factory in India. While the Indian market offers potential opportunities, addressing the highlighted concerns will be crucial for Tesla to succeed in establishing its manufacturing presence in the country.

According to dewDiver sources, the ongoing talks between the Indian government and Tesla for the entry of the electric vehicle company in the country are expected to slow down due to the upcoming general elections. According to the Election Commission of India General elections are being held in India from 19 April to 1 June 2024 in seven phases, to elect 543 members of the Lok Sabha.

Tesla is considering withholding its decision to enter the Indian market until after the current government is no longer in power. This decision is likely influenced by uncertainties surrounding government policies and regulations.

The company may be waiting for a more favorable political environment before making a commitment to establish a presence in India. This cautious approach suggests that Tesla is prioritizing stability and predictability in its business expansion strategy.

The potential delay in entering the Indian market reflects the importance of political factors in shaping corporate decisions on international expansion.

dewDiver

A senior government official mentioned that the discussions will resume after the elections, as it may create controversies during the electoral period. This development follows reports that Tesla is willing to invest around $30 billion in India over the next five years, indicating a significant potential for growth in the EV sector in the country.

Diver Insights:

• The main reason for Tesla delaying its decision to come to India for a long time could be that elections are about to start in India and if the current government does not come to power and the new government does not support it, then Tesla will suffer a huge losses.
• Talks between Indian government and Tesla for entry into the country likely to slow down due to upcoming general elections
• Discussions will resume post elections, as it may create controversies during election period
• According to previous news, Tesla plans to invest around $30 billion in India over the next five years
• Tesla has begun producing right-hand drive cars in Germany for export to India later this year, with plans to establish a local manufacturing plant requiring an investment of about $2 billion.
• The company is considering building a smaller car in India priced at less than $30,000, which could be sold in India and exported to other regions like south-east Asia, the Gulf, Africa, and southern and eastern Europe.
• Tesla’s potential investment in India could reach $2 billion to $3 billion for the car plant, with suppliers expected to invest billions more, making it one of India’s largest inward foreign investments.