Elon Musk Announces $2 Billion Investment for Gigafactory in India

In a bold move that could reshape the future of electric vehicles in India, Tesla, led by the indomitable Elon Musk, is gearing up to invest a staggering $2 billion in the country. However, this hefty commitment comes with a caveat: Tesla is seeking a concessional duty of 15 percent on imported vehicles during its first two years of operation in India, sparking a high-stakes negotiation with the government.

As reported by Business Today, Tesla's proposal hinges on the approval of a reduced import duty ranging from 15 to 20 percent, a significant drop from the standard 100 percent duty imposed on such imports. The Economic Times reveals that Tesla has presented a detailed plan, intricately tying the investment amount to the number of cars eligible for this reduced duty. Sources suggest that Tesla is willing to inject $500 million if the concessional tariff extends to 12,000 vehicles or a whopping $2 billion if it encompasses up to 30,000 vehicles.

The government is now in the hot seat, carefully examining the viability of the proposed $2 billion upper limit. However, it appears cautious about extending the concessional tariff to a large number of cars. There's ongoing evaluation on whether to limit the concessional tariff to 10 percent of the total projected electric vehicles (EVs) sales for the current fiscal year.

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Tesla's proposal is currently under the meticulous scrutiny of various government bodies, including the Finance Ministry under the Prime Minister's Office (PMO) guidance, Ministry of Heavy Industries, Ministry of Road Transport & Highways, and the Department for Promotion of Industry and Internal Trade. This cross-ministerial evaluation reflects the strategic importance of Tesla's potential investment in India.

Elon Musk has been a vocal critic of India's import duties, specifically the 100 percent duty on cars exceeding $40,000 and the 70 percent duty on cars below this threshold. Despite expressing interest in the Indian market, Musk has consistently pointed to these duties as a significant hurdle. Now, Tesla's proposition seems to be a strategic maneuver to navigate this challenge and establish a foothold in one of the world's fastest-growing electric vehicle markets.

Bloomberg's recent report suggests that Tesla is on the verge of finalizing a groundbreaking deal with the Indian government. If successful, the deal could enable Tesla to import its electric vehicles into India starting next year, in addition to establishing a manufacturing plant within a span of two years. The reported $2 billion investment is poised to not only bolster Tesla's presence in the country but also involve significant sourcing of auto parts, potentially worth up to $15 billion, from India. However, it's crucial to note that these plans are still in flux and subject to potential changes.

Adding a layer of excitement to Tesla's India strategy, Moneycontrol's report indicates the company's ambition to launch its most affordable model, the Model Y Crossover, in India. This model, initially set to debut in Germany at 25,000 Euros, could mark a significant step toward making Tesla's electric vehicles more accessible to the Indian market.