Elon Musk’s heading to India is a seemingly beneficial situation for Tesla and Modi
Elon Musk, CEO of Tesla and SpaceX, is expected to visit India next week for a high-profile trip that could mark a significant turning point for the electric carmaker. The agenda includes a highly anticipated meeting with Prime Minister Narendra Modi, potentially leading to a substantial investment and factory construction in the world’s second-most populous nation.
Musk’s upcoming visit was mentioned on social media, where he expressed his enthusiasm for meeting Modi. Though the exact date remains undisclosed, Indian media and Reuters, citing anonymous sources, suggest it will occur next week in New Delhi. He is also scheduled to meet with Indian space tech startups, demonstrating a broader interest in the country’s burgeoning technological landscape.
Industry insiders suggest Musk’s visit could pave the way for a $2-3 billion investment in India, primarily focused on establishing a new Tesla factory. This news comes amidst India’s recently concluded national elections, where Modi is heavily favored to win a third consecutive term.
The potential investment aligns perfectly with Modi’s vision for India as a global manufacturing powerhouse. His Bharatiya Janata Party (BJP) manifesto explicitly mentions plans to simplify regulations and invest in infrastructure to attract capital and foster research and development. This strategy aims to capitalize on the ongoing reevaluation of global supply chains by major corporations, many of whom are seeking alternatives to China due to pandemic disruptions and rising tensions with the US. With its vast workforce and growing economy, India presents an attractive option.
Beyond consumer electronics, the Modi government particularly promotes electric vehicle (EV) manufacturing. Their manifesto pledges support for the auto industry’s transition to EVs and investment in a nationwide charging infrastructure.
Tesla’s entry into this rapidly growing market would be mutually beneficial. While electric vehicles comprise a minuscule portion of India’s car sales, the future holds promise. Meanwhile, Tesla faces softening demand in established markets like the US and China. Recent staff cuts and a year-over-year sales decline in the first quarter of 2024 highlight the need for new avenues of growth.
Despite briefly losing the global EV sales crown to Chinese automaker BYD in late 2023, Tesla remains a leader in the industry. With its ambitious target of 30% electric vehicle sales by 2030, India represents a strategic opportunity.
Musk’s push into India is not new; plans to enter the market as early as 2017 were delayed due to import duty negotiations with the Indian government. However, recent policy changes aimed at attracting EV manufacturers by lowering taxes for locally produced cars have smoothed the path for Tesla.
While India is a crucial target for Tesla, Thailand is also a potential location for a new production facility. Talks between the company and the Thai government are ongoing. Tesla has yet to comment on these developments.
One thing is sure: Musk’s upcoming visit to India is a significant development with the potential to reshape the landscape of the electric vehicle market in the world’s most populous democracy.
