Andhra Woos Tesla For EV Manufacturing Facility: Report

Amid the EV manufacturing push in the country, Andhra Pradesh is reportedly making efforts to attract Elon Musk’s Tesla to set up its manufacturing facility in the state.

The state government’s Economic Development Board (EDB) has prepared a pitch which highlights its port connectivity and land to attract the US-based company, ET reported, citing sources close to the matter. 

Additionally, the state is mulling to offer incentives, including ready land parcels.

Initially, the state aims to assist the company in importing cars via its ports. Furthermore, the state claims that southern Andhra Pradesh has a “ readymade ecosystem of auto companies, battery manufacturers and ancillary manufacturers,” which can be ideal for the company to set up the manufacturing plant.

This comes months after Andhra Pradesh’s minister Nara Lokesh reportedly visited Tesla’s headquarters at Austin and had a meeting with its chief financial officer Vaibhav Taneja.

A few days back, Tesla geared up its entry in India by beginning the process to ship a few electric cars to a port near Mumbai over the coming months. Post that, the company is likely to set up a manufacturing plant in the country.

The company has also finalised two locations for its showrooms in Delhi and Mumbai.

Tesla’s entry in India has gone through several challenges in the past. In 2021, Musk expressed his concerns regarding the high import tax in India, which kept on being a barrier for Tesla to enter the market. Later in 2022, the EV manufacturer put a hold on the India plan again because of the high import tax. 

To address these concerns, the Centre approved a new EV policy in March 2024. Under this policy, the import duty on vehicles with cost, insurance and freight (CIF) value of $35,000 or above will be reduced to 15% for five years. The tax relief is valid for the companies which agree to invest at least INR 4,150 Cr (about $500 Mn) in India to set up manufacturing facilities.

As per a report by brokerage firm CLSA, Tesla’s cheapest car, Model 3, would cost around INR 35 Lakh to INR 40 Lakh in the country despite lower import rates.

As per other reports, the US-based company is in talks with multiple states, including Gujarat, Maharashtra and Tamil Nadu, to set up its manufacturing unit.