With Tesla entry uncertain, India woos other EV makers
The Indian government is now also considering EV investments at existing factories that currently build gasoline-engine and hybrid cars, sources told Reuters.
India plans to expand EV incentives to carmakers building models at existing plants in the country, instead of limiting the benefits to automakers willing to build new plants, according to a report by Reuters.
India’s EV policy was initially meant to encourage Tesla to enter the market and manufacture locally, but the US automaker backed off this year.
However, other automakers have shown interest in making EVs in India, and the government hopes that changes to the EV policy will encourage investment from global players like Toyota and Hyundai, the report says.
An automaker investing at least USD 500 million to manufacture EVs in India with 50% of components sourced locally can claim a large cut on import taxes as per the policy announced in March. The government is now also considering EV investments at existing factories that currently build gasoline-engine and hybrid cars, sources told Reuters.
But the electric models must be built on a separate production line, meeting local sourcing criteria.
For a new factory, investment in machinery and tools to build EVs will be counted in full towards the USD 500 million requirement, the report says.
The Indian government is also considering a minimum EV revenue target to quality for the scheme, the Reuters report says.
Since Tesla initially pledged it would sell cars in India eight years ago, other automakers have launched their own EVs. But Elon Musk’s company has apparently backed down over concerns that taxes would make its cars too expensive in India along with the difficulties involved in possibly shifting production away from China.
To woo automakers like Tesla, India even reduced its import duties to 15% from 70%-100% in March 2024 for EVs cheaper than $35,000.
Eight years is a very long time in a rapidly evolving new-tech sector like electric cars. And the Indian government appears to have made up its mind about joining the EV bandwagon without waiting any longer for Tesla.
