Photo: Narendra Modi via Twitter | Edited
Tesla entered talks to build a gigafactory in India a year ago, but the plans were put on hold after the Indian government refused to lower import taxes for the made-in-China Tesla EVs. Now, the talks are again open, reportedly at Tesla's request. The chances for Tesla's next gigafactory to be in India are higher than ever.
Many Tesla skeptics don't understand why Tesla needs more production facilities when its current production exceeds demand. In the first quarter, Tesla throttled Giga Shanghai and its factory in Fremont to compensate for the production ramp at Giga Texas and Giga Berlin. And although the Model Y is more popular than ever, the other modules in Tesla's lineup are not as successful in finding new customers.
As the inventory was building, Tesla had already tried price cuts without a significant result. Analysts who follow Tesla also noticed that the backlogs are at the lowest level ever. All these metrics seem to support the idea that the demand for Tesla EVs is low, questioning the decision to build more gigafactories. To add more weight, Elon Musk was even open to advertising, which undoubtedly caused hell to freeze over.
The thing is, Tesla and Elon Musk are dead serious about the plans to get to the 20 million EVs sold annually by 2030. This is not a fantasy, despite the slowing sales for all Tesla EVs except the Model Y. The key is adding new vehicles to the lineup and expanding Tesla's customer base. The next-generation compact EV thought to sell for under $25,000 should provide much higher volumes. Elon Musk revealed during the 2023 Shareholder Meeting that he expects the Gen-3 platform to account for at least 5 million vehicles per year for two models.
Tesla is already building Gigafactory Mexico for the next-gen compact model. Giga Mexico is poised to become Tesla's biggest manufacturing facility, surpassing even Giga Shanghai. But if Elon wants to reach that 5 million vehicle mark, it still needs additional production capacity. The best plan is to produce an affordable model in a country with low wages and a highly skilled workforce. If that country is a big automotive market, this is even better. India fits the bill perfectly, ticking all the checkboxes.
This is why Tesla wants to build a gigafactory in India, even though the local government previously refused to lower import tariffs at the EV maker's request. Tesla could not export Giga Shanghai production to India because of the 110% tariffs on cars imported from China. This has been a problem in the previous negotiations because Tesla wanted to sell its vehicles in the country before committing to building them locally. In the meantime, the next-gen EV plans have changed the perspective.
According to Reuters, Tesla officials traveled to India to discuss plans for its next gigafactory. The meeting took place on Wednesday, but no statement on the meeting results was made public. The discussion comes weeks ahead of the Indian prime minister Narendra Modi's visit to the US, planned for June. Tesla did not specify where it wants to locate its gigafactory or how much money it wants to invest. Still, the EV maker didn't mention lowering the tariffs during the discussions.
As the inventory was building, Tesla had already tried price cuts without a significant result. Analysts who follow Tesla also noticed that the backlogs are at the lowest level ever. All these metrics seem to support the idea that the demand for Tesla EVs is low, questioning the decision to build more gigafactories. To add more weight, Elon Musk was even open to advertising, which undoubtedly caused hell to freeze over.
The thing is, Tesla and Elon Musk are dead serious about the plans to get to the 20 million EVs sold annually by 2030. This is not a fantasy, despite the slowing sales for all Tesla EVs except the Model Y. The key is adding new vehicles to the lineup and expanding Tesla's customer base. The next-generation compact EV thought to sell for under $25,000 should provide much higher volumes. Elon Musk revealed during the 2023 Shareholder Meeting that he expects the Gen-3 platform to account for at least 5 million vehicles per year for two models.
Tesla is already building Gigafactory Mexico for the next-gen compact model. Giga Mexico is poised to become Tesla's biggest manufacturing facility, surpassing even Giga Shanghai. But if Elon wants to reach that 5 million vehicle mark, it still needs additional production capacity. The best plan is to produce an affordable model in a country with low wages and a highly skilled workforce. If that country is a big automotive market, this is even better. India fits the bill perfectly, ticking all the checkboxes.
This is why Tesla wants to build a gigafactory in India, even though the local government previously refused to lower import tariffs at the EV maker's request. Tesla could not export Giga Shanghai production to India because of the 110% tariffs on cars imported from China. This has been a problem in the previous negotiations because Tesla wanted to sell its vehicles in the country before committing to building them locally. In the meantime, the next-gen EV plans have changed the perspective.
According to Reuters, Tesla officials traveled to India to discuss plans for its next gigafactory. The meeting took place on Wednesday, but no statement on the meeting results was made public. The discussion comes weeks ahead of the Indian prime minister Narendra Modi's visit to the US, planned for June. Tesla did not specify where it wants to locate its gigafactory or how much money it wants to invest. Still, the EV maker didn't mention lowering the tariffs during the discussions.
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