Tesla held talks with India on car incentives and battery manufacturing – source

NEW DELHI, May 18 (Reuters) – Tesla Inc has held talks with officials over incentives offered by India for manufacturing cars and batteries, a person with direct knowledge of the talks said , as the automaker again plans to enter the Indian market.

The U.S. electric carmaker has offered to set up a factory in India to build electric vehicles, Reuters reported on Wednesday. Plans to manufacture batteries locally for electric vehicles are also being discussed, the person with direct knowledge said.

Tesla is “always testing the waters and trying to understand local politics,” said the person, who declined to be named because the talks were private.

The automaker did not immediately respond to an emailed request for comment.

The recent talks represent a shift in stance for Tesla.

Late last year he focused on seeking a reduction in import taxes on cars, which can be as high as 100%, and talks with the Indian government ended up in the dead end. India is keen for Tesla to build vehicles locally, but the company has argued it wants to export first so it can test the strength of demand.

Recent discussions have focused on Indian taxes on imported cars, but have mainly focused on how Tesla could use a government program, the source said.

India has set aside around $6 billion under two programs to boost sales and manufacturing of electric vehicles. Under these programs, car manufacturers and battery manufacturers can obtain certain cash incentives for the sale and export of locally manufactured vehicles and parts.

“It looks like Tesla came with a different heart and mind this time to take advantage of the auto boom (in India)…Tesla can negotiate things like taxes better if they set up a factory first,” said Mohan Shukla of New Delhi-based Public Policy Advisor, White Dolphin Media.

Tesla has outlined a goal of selling 20 million electric vehicles a year by 2030, a level that would require massive new investment in assembly plants and battery production.

Outside the United States, Tesla has a factory in Shanghai – its largest factory in the world – and a factory in Brandenburg, Germany.

It’s building its next “gigafactory” in northern Mexico – a $5 billion factory slated to go live as early as 2024 and one where it will assemble a “next gen” vehicle.

In addition to India, Tesla has been in talks over the past year with Indonesian and South Korean officials about potential investments.

India is the world’s third largest automotive market. Prime Minister Narendra Modi’s administration has set an ambitious target of EVs accounting for 30% of total car sales in India by 2030, up from around 1% today.

While Tata Motors (TAMO.NS) leads electric vehicle sales in India, China’s BYD (002594.SZ) and SAIC Motor (600104.SS) as well as Stellantis (STLAM.MI) also have models on the market.

Tesla’s talks with India come at a crucial time for Modi as he seeks to attract investment ahead of next year’s national elections where he will seek a rare third term.

Reporting by Aditi Shah and Aditya Kalra; Editing by Jacqueline Wong

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