India to Modify EV Policy as Tesla Plans Market Entry

The Indian government is poised to amend its electric vehicle (EV) policy as Tesla, the U.S.-based electric car maker, prepares to enter the Indian market. This strategic move is reportedly guided by Tesla's plan to establish a significant presence in India, starting with the import of vehicles from its Berlin Gigafactory.

According to industry sources, the revised EV policy may include conditions such as requiring automakers to achieve a turnover of Rs 2,500 crore by their second year of operation. This adjustment is part of the efforts to accommodate Tesla's entry strategy, which involves initially relying on imported vehicles before increasing local procurement.

Furthermore, the government is considering offering additional import duty relief to facilitate Tesla's market entry. This comes in the backdrop of a previous EV policy set in March, which required a minimum investment of Rs 4,150 crore for setting up manufacturing facilities and achieving domestic production within three years. The policy also mandated specific domestic value addition targets.

The government plans to open registrations for the updated EV policy by mid-March, with approvals expected by August. This timeline reflects the urgency in adapting the policy framework to attract global players like Tesla, which is intending to apply a “top-down approach” by introducing luxury models initially, followed by more affordable options.

Tesla's strategy includes importing the Model Y, which is compatible with the right-hand drive roads in India, from its Berlin Gigafactory. Additionally, the company is actively seeking locations for showrooms in major cities like Mumbai and Delhi, alongside recruiting staff for various roles.

Experts anticipate the Indian EV market could surpass 40% penetration and achieve a revenue milestone of $100 billion by 2030, underscoring the potential growth opportunities for Tesla and other automakers in the region.