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Tesla May Ship In Made-in-China Cars To India

The Phase 1 of the project will manufacture Tesla Model 3 and Tesla Model Y cars, with a production rate of 250,000 units per annum, the output may be doubled in the second phase to 5,00,000 units per annum

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Taking a cue from global tech giants like Apple Inc, Tesla Motors is also mulling to ship in a couple of models from its upcoming facility in Shanghai, China to India. Although plans remain sketchy  at the moment as the first batch of models may still be imported from its mother plant in the US , industry observers reckon that  prohibitive logistics costs, exorbitant taxes and longer delivery schedules may propel one of the world's most innovative car maker to ship in Model 3 sedan and Model Y SUV to India by 2021-22. 

According to a well informed source who requested anonymity, “This move will be a key strategy for Tesla in China as the upcoming facility is specifically tasked to produce affordable versions of the Model 3 sedan and Model Y SUV for the Asian market including India.  While the first  few quarters will be dedicated to the domestic market, a few batch of Right-hand drive models may eventually be exported later to  neighbouring countries, including India. However, the company is yet to take a final call on it as importing a CBU from China to India has its own set of challenges.”

While Dave Arnold, Sr. Director, Global Communications at Tesla could not be reached for comments, an emailed query sent to its  APAC spokesperson also could elicit any response.  

Deepesh Rathore, co-founder of Gurugram-based automotive consultancy Emerging Markets Automotive Advisors maintained, Tesla would definitely enter India but I would not speculate on the timeline as the company has a lot of problems - manufacturing, profitability, costs - to sort out before expansion may happen. The first Tesla cars in India would definitely arrive from China.  With their price structure, the cheapest Tesla sells for US$ 60k, I look at them as a very niche play, “ adding, “While a few quarters back, I was more confident about Tesla setting up a plant in India, the company's present concerns mean that it may put any such plans on the back-burner. The Indian government's lack of vision regarding EVs means that tesla has no incentive to be serious about the country.”

Elon Musk in a tweet had earlier maintained, "Would love to be in India. Some challenging government regulations, unfortunately." He has also maintained that the company is engaged in discussions with the government for providing temporary relief from import restrictions and duties till it sets up a local manufacturing facility. However, there was no headway after that.”

Recent media reports also suggest that Tesla Inc  has commenced orders China for a lower-priced version of its Model 3, which will be equipped with Tesla's Autopilot assisted driving function. The California-based firm said in a statement maintained that a standard range Model 3 variant whose starting price of 377,000 yuan ($56,167) will enable it to become the cheapest version of the car in the world’s largest EV market. 

“The Model 3 would be the ideal one till they figure out cheaper models than that. While it was touted as the $35,000 (Rs 25 lakh) Tesla, it has ended up more like the US$ 60k Tesla. So expect Indian prices to be around Rs One Crore. At that price, and because the product is an EV, I expect volumes to be low so Tesla may end up tying up with a dealer franchise,”  revealed Rathore. 

Meanwhile, the so-called Tesla Gigafactory 3,  spread over 86 hectares (210 acres), is a $2 billion facility currently under construction in Shanghai, China by Tesla, Inc. and will produce battery cells along with  at an initial production rate target of 250,000 electric cars per year for the domestic market. The Phase 1 of the project will manufacture Tesla Model 3 and Tesla Model Y cars, with a production rate of 250,000 units per annum, the output may be doubled in the second phase to 5,00,000 units per annum.