India Doesn’t Feature In Tesla's Plans To Make Affordable Electric Cars

Tesla Inc. wants to make affordable electric cars, just not in India. At least not immediately. The world’s largest electric carmaker by market capitalisation plans to raise production by 50% to its current installed capacity of 3 million units before investing in new manufacturing lines, according to a post-earnings conference call on April 23.

“We’ve updated our future vehicle line-up to accelerate the launch of new models ahead,” Elon Musk, chief executive at Tesla, said in his opening address to the concall. “I previously mentioned the start of production in the second half of 2025, so we expect it to be more like early 2025, if not later this year.” 

These new vehicles, he said, will be able to be produced on the same manufacturing lines as Tesla’s current vehicle line-up.

“So, it’s not contingent on any new factory or massive new production line; it’ll be made on our current production lines much more efficiently,” he said. “And we think this should allow us to get over the 3 million vehicles of capacity when realised to the full extent.”

Investors cheered that prudent approach to capital expenditure at a time when Tesla's earnings are under pressure. The stock surged as much as 13% in after-hours trading in the United States, despite the company missing estimates.

Musk postponed his April 21-22 India trip at the last moment, citing “very heavy” Tesla obligations, with a promise to visit later this year.

The billionaire entrepreneur was due to visit Prime Minister Narendra Modi in New Delhi, following which he was widely expected to unveil a $2-3 billion investment plan for India, involving electric cars, satellite internet and space technology.

The Modi administration, in fact, laid out a red carpet of sorts for Musk.

In March, India tweaked its EV policy to reduce customs duty on electric cars to 15% from 70-100%, provided their maker invests at least $500 million to set up local manufacturing operations. The import tax was proving to be a sticking point for Tesla’s entry into India.

Since then, the Model 3 maker moved into a higher gear to fasttrack its entry into the world's third largest automotive market.

Tesla, according to reports, had started manufacturing right-hand drive cars at its Berlin plant for the Indian market. Its officials were reportedly scouting for locations to set up manufacturing and retail operations here. Additionally, the company has reportedly tied up with Tata Electronics Pvt. Ltd. for componentry that would go into locally produced cars.

All those plans have come a cropper now. Or at least are on the backburner.