Musk interested in India as new Tesla factory location

Elon Musk did not give an indication of where a future factory might be built at the Wall Street’s Journal’s CEO Council conference on Tuesday, but agreed with the moderator that India was “absolutely” an interesting location.

He clarified later in the session that the company is “not currently looking at new locations.”

Tesla operates several so-called Gigafactories in the U.S., and two outside of the U.S., near Berlin, Germany, and Shanghai, China. The company revealed earlier this year that it would also build a factory in Monterrey, Mexico, with an expected production start date of 2024. 

Tesla did not immediately respond to a request for comment.

India option

Musk has wanted to break into the Indian market for several years now.

Tesla established two local subsidiaries in early 2021, but Musk’s efforts to break into the Indian market were hindered by high import duties on electric vehicles, which can be as high as 100%. 

India asked that Musk promise to manufacture, or at least assemble, cars domestically instead of asking for tax breaks. Tesla, instead, argued that India should lower taxes first so that the company could test demand with imported cars before committing to manufacturing. 

But Tesla’s stance may have weakened in recent weeks.

Tesla executives traveled to India last week, and proposed setting up a factory to build EVs in the country, for both domestic and export markets, Reuters reported last week. 

Tesla is “very seriously looking at India as a production and innovation base,” Rajeev Chandrasekhar, India’s deputy technology minister, later told Reuters. Chandrasekar suggested that Tesla may be interested in more than just car manufacturing, noting that “you don’t talk about cars alone.”

India is just one country jockeying to be the home of a potential new factory.

Indonesian president Joko Widodo has personally lobbied Musk to invest more in the country, especially in nickel production. The Southeast Asian country has one of the world’s largest reserves of nickel, a key material in batteries. 

South Korean president Yoon Suk-Yeol also met Musk during his visit to the U.S. last month. Musk reportedly told Yoon that South Korea was one of the top candidates for Tesla’s next factory.

China

Musk’s idea will be to replicate the success of Tesla’s Shanghai Gigafactory, which opened in 2019.

The factory is now a critical part of Tesla’s supply chain, making over half the company’s delivered cars in 2022. Tesla is also one of the top sellers of electric vehicles to Chinese consumers, and one of the few foreign carmakers to succeed in the tough EV market.

Yet Tesla also had a tough 2022, as the country’s tough COVID controls, including a two-month lockdown in Shanghai, severely disrupted manufacturing and exports.

Even with special permission to keep working through the lockdown, Tesla’s Shanghai production fell below capacity due to shutdowns among its suppliers.

More recently, the company launched a price war in a bid to capture market share from its competitors, like Nio, Xpeng, and market leader BYD.