Will Tesla drive into Tamil Nadu?

CHENNAI: After striking two big-ticket deals with Vinfast and Tata Motors in less than 90 days, the question doing the rounds is whether Tamil Nadu can pull off a hat-trick by getting the most popular electric vehicle of all – Tesla.

While the State’s efforts to woo the marquee brand to invest is about four to five years old, what has brought back the question is that the Elon Musk-led company is reportedly coming to India to scout sites to set up its plant. Quoting two sources with direct knowledge of the plans, the Financial Times, London, reported on Wednesday that the representatives from the company are coming to India by late April, envisaging an investment of $2 billion to $3 billion.

Other than Tamil Nadu, which carved a space over the decades as an automobile manufacturing hub, newer entrants like Maharashtra and Gujarat are also in the race to bag the prestigious brand, the report said, which also noted the Centre unveiling policy tweaks last month as part of its aggressive push to lure EV players.

The reduction of import taxes on certain EVs produced by the firms willing to commit an investment of $500 million with a domestic manufacturing facility in three years is seen as a clear attempt to attract Tesla. The company said in July last year it was interested in building a factory in India to produce an EV priced at $24,000, but called for lower taxes on more expensive models it wants to sell in India.

Even as he underplayed the latest development, a State government official told DT Next that Tamil Nadu has a strong case when it comes to both logistics perspective or a competitive advantage, as it has a robust automobile manufacturing ecosystem. Another person, who was part of two such State government delegations that met leading automobile firms across the world – including a visit to Tesla’s first plant in Sunnyvale, California, way back in 2017-18 – said the company was not prepared to enter India, as the country was not perceived as a mature market for EVs. Instead, it was looking at China and Germany as potential sites to set up its manufacturing units.

But the idea behind these visits was to “seed” the thought of evaluating Tamil Nadu as a potential destination, the person told this newspaper.

According to this individual, the State has two fundamental advantages – an automotive ecosystem and competitive advantage. Component manufacturing, skilled manpower and port logistics are drivers that work in Tamil Nadu’s favour to attract Tesla.

Other than the legacy behemoths that invested in Tamil Nadu several years ago, Chinese EV major BYD has an assembly unit in Irungattukottai, where it makes vehicles by importing components. Most recently, Tata Motors and Vietnam’s Vinfast have committed investments in excess of Rs 25,000 crore, which will boost production capacity to four lakh vehicles.

Though EVs made up only about 2 per cent of the total car sales in India last year, the Union government is targeting 30 per cent by 2030. In line with this aim, Union Transport Minister Nitin Gadkari explicitly said that the government would phase out petrol and diesel vehicles if it is elected for another term.

On Monday, Tesla’s sustainable energy storage solutions provider spelt out its plan to recruit over 2,000 employees across various verticals as part of its expansion plans. The planned recruitment drive of Tesla Energy India will encompass positions across engineering, operations, sales, marketing, and support functions, providing ample job opportunities for the youth. It had recently launched its refurbished battery brand ReStore, with plans to open 5,000 ReStore units by 2026 across the country.