AHMEDABAD, India (Diya TV) – The Indian government is on the verge of finalizing an agreement with electric vehicle (EV) giant Tesla, allowing the company to import its electric vehicles to the country from next year. The deal, expected to be officially announced at the Vibrant Gujarat Global Summit in January 2024, paves the way for Tesla to establish a manufacturing plant in India within the next two years.

Gujarat, Maharashtra, and Tamil Nadu are actively competing to host Tesla’s manufacturing plant, boasting established ecosystems for EVs and exports, according to sources. The move aligns with the Indian government’s push for increased domestic manufacturing of EVs, led by Prime Minister Narendra Modi, to accelerate the shift towards cleaner transportation.

As part of the agreement, Tesla is poised to invest a minimum of $2 billion in the manufacturing plant, with plans to significantly increase auto parts purchases from India, potentially reaching up to $15 billion. The company is also exploring the possibility of manufacturing batteries within the country, aiming to reduce costs and contribute to the growth of India’s EV market.

Despite India’s burgeoning demand for electric vehicles, challenges such as high upfront costs and a lack of charging infrastructure have hampered the growth of the EV market, constituting only 1.3% of total passenger vehicle sales last year. Tesla’s potential local manufacturing could address these challenges and offer a more affordable pricing strategy, with estimates suggesting locally produced Tesla cars could be priced as low as $20,000.

Negotiations between India and Tesla resumed earlier this year after a year-long impasse, with the company expressing a renewed interest in the Indian market. Union Minister Piyush Goyal’s recent visit to Tesla’s facility in California further underscores the collaborative efforts, with Tesla planning to nearly double its auto parts purchases from India to $1.9 billion this year.