Indian Government Courts Tesla for Manufacturing

India wants to become Tesla’s Asian manufacturing hub, but is that likely?

Inside Tesla's Fremont, CA plant. (Image courtesy of Tesla Motors.)

Inside Tesla’s Fremont, CA plant. (Image courtesy of Tesla Motors.)

Is Tesla the future of electric vehicles (EVs)?

There are certainly skeptics, but if the automotive startup is to have any chance of becoming a major player then it must expand. However, Tesla can’t expect to achieve a truly global impact without opening at least one manufacturing facility in Asia.

The Indian government appears to agree and its Minister of Road Transport, Highways and Shipping, Nitin Gadkari, has been campaigning to make India Tesla’s Asian manufacturing hub. Gadkari recently visited the company’s Fremont, California plant to plead his case.

According to an official statement from the Indian government, the minister offered Tesla land near major Indian ports to facilitate the export of its vehicles to South and South East Asian countries.

“Tesla senior executives admitted that their manufacturing hub has to be outside the US for markets in the rest of the world and appreciated the Indian offer of cooperation, which they said will certainly be considered at the appropriate time in the future,” the statement read. “They said India will definitely be a market for their next generation, low cost, sustainable Model 3.”

Elon Musk with Indian Prime Minister Narendra Modi.

Elon Musk with Indian Prime Minister Narendra Modi.

Indian Prime Minister Narendra Modi also visited Tesla Motors last year, as part of his government’s initiative to encourage EV transportation in the country.

“Replying to specific queries from the Transport and Highways Minister regarding manufacturing of electric trucks, buses and two-wheelers, the Tesla team said they have future plans for trucks and pick-up vans, but not buses and two-wheelers,” the statement read.

 

Tesla: Made in India?

Although Tesla has repeatedly referred to its Fremont plant’s optimal production capacity as approximately 500,000 cars per year, the company is only projecting to make 90,000 vehicles in 2016.

Elon Musk’s Master Plan, Part Deux predicts that “somewhere between a 5 to 10-fold improvement is achievable by version 3 on a roughly 2-year iteration cycle.”

Given the characterization of the first Model 3 factory as “version 0.5, with version 1.0 probably in 2018,” Tesla won’t be up to full production capacity until 2022. In other words, the company won’t actually need to expand anytime soon, which makes the prospect of India becoming Tesla’s Asian manufacturing hub a rather distant one.

Bajaj Auto plant in Pune, India. (Image courtesy of Bajaj Auto.)

Bajaj Auto plant in Pune, India. (Image courtesy of Bajaj Auto.)

Nevertheless, suppose Tesla does get to the point where it’s seriously considering a manufacturing facility in Asia. Does India make the most sense? The company’s lack of interest in buses and two-wheeled vehicles suggests that India is not an ideal market for Tesla.

China could support significantly more luxury vehicle sales while potentially matching or even beating India’s land and labor costs. In fact, Jon McNeill, Tesla’s president of global sales, has previously implied that the company’s next factory could very well be in China.

What do you think? Can Tesla reach Musk’s lofty production goals and if it does, where will the next Tesla factory be located? Comment below.

Written by

Ian Wright

Ian is a senior editor at engineering.com, covering additive manufacturing and 3D printing, artificial intelligence, and advanced manufacturing. Ian holds bachelors and masters degrees in philosophy from McMaster University and spent six years pursuing a doctoral degree at York University before withdrawing in good standing.