Tesla is closing in on a $2 billion factory deal in India, report says

Tesla is reportedly closing in on a $2 billion deal to build a factory deal in India after years of ups and downs in negotiations.

India has the biggest auto market that Tesla has yet to enter.

There has been a ton of back and forth between the Indian government and Tesla to make it happen, but the negotiations have been harder than usual.

The Indian government wants Tesla to build a factory in the country in order for them to enter the market, but the automaker prefers to first test the waters with imported vehicles.

However, India has strong EV import duties that prevent that.

In 2021, Tesla officially incorporated an Indian company in Bengaluru, the capital of India’s southern Karnataka state. During the summer, Indian government officials said that they are considering Tesla’s proposal to greatly reduce import duties for electric cars.

Later that year, Tesla vehicles have been spotted being tested on Indian roads (pictured above), and it got seven electric vehicle variants approved in the country.

However, the company wasn’t able to come to a deal on import tariffs, and in 2022, Tesla decided to put its plans to enter the Indian market on hold.

Over the last year, there has been a renewed effort for Tesla to enter the market and the company has engaged with the government in new negotiations.

Earlier this month, we learned that India was again considering a special deal with Tesla to reduce the import duties.

Now Bloomberg reports that Tesla is getting close to a deal that would involve a $2 billion investment in a factory:

India is closing in on an agreement with Tesla Inc. that would allow the US automaker to ship its electric cars to the country from next year and set up a factory within two years, according to people familiar with the Indian government’s thinking.

According to the report, on top of the $2 billion investment in a factory, Tesla would commit to buying $15 billion in parts from Indian suppliers.

The automaker is reportedly also considering a battery factory in the country.

Electrek’s Take

I’ve heard that one before. We have been burned by Tesla’s entry into India before so I’m not putting too much weight on that report.

I’ll believe it when I see it, but we know that Tesla teams have met frequently with Indian officials in recent months so it’s not impossible that they are getting close to a deal.