Tesla Poised to Bring Fully Assembled Electric Vehicles from German Plant to India

09 Nov, 2023

Tesla Poised to Bring Fully Assembled Electric Vehicles from German Plant to India

Tesla Inc., the American automotive and clean energy giant, is set to mark its entry into the Indian market, starting with direct imports from its Gigafactory in Germany. Although a concrete timeline for Tesla's foray into India is yet to be established, sources reveal that the company's initial phase in the country will involve importing vehicles directly from its German facility.

Informed insiders have disclosed that the Indian government has advised Tesla against importing cars from its Shanghai Gigafactory in China due to existing geopolitical tensions between the two nations. The preference is for Tesla to leverage the Indo-German ties, emphasizing the diplomatic and business relationships between India and Germany.

Tesla has invested €5 billion in establishing its Gigafactory in Brandenburg, Germany, the company's first facility in Europe. The plant currently produces the Model Y Crossover, with plans for a significant capacity expansion to accommodate up to 1 million units annually. Recent reports suggest that Tesla is gearing up to launch a €25,000 car in the Indian market.

Sources indicate that Tesla is actively seeking a customs duty cut on Completely Built Up (CBU) electric vehicle imports from Germany. The government seems open to the idea, considering similar concessions granted to other luxury car manufacturers based in Germany, such as Mercedes, BMW, and Audi.

Contrary to initial claims, CNBC-TV18 reports that the government's consideration of customs duty concessions for Tesla is speculative, with no official decision made as of now. Currently, India imposes a 100 percent customs tax on imported cars with a Cost, Insurance, and Freight (CIF) value exceeding US$ 40,000.

While Tesla remains silent on the matter, insiders suggest that the company envisions sizable volumes for its affordable €25,000 car in the Indian market. Initially, the car will follow the Completely Knocked Down (CKD) route, with kits imported from Germany and later undergoing significant localization in India.

Experts anticipate a positive impact on India and Tesla, with the country's growing interest in greener cars aligning well with Tesla's global vision. Tesla's entry into India, particularly with cutting-edge EV technology, is expected to drive consumer inclination toward electric vehicles.

Union Commerce Minister Piyush Goyal has indicated Tesla's plans to source automobile components worth $1.7-1.9 billion in the current calendar year, doubling the quantum of auto component imports from the previous year.

Despite the optimism, some industry veterans, like Avik Chattopadhyay, express caution, suggesting that the electrification of mobility in India will be a gradual process. He compares the hype around Tesla's entry to the manufacturing of iPhones in India and emphasizes the need for realistic expectations amid the evolving automotive landscape.