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Tesla Has State Government Invite For Giga, R&D Hub In Bangalore

A domestically made Tesla Inc (NASDAQ: TSLA) vehicle in India could soon become a reality, if reports are to be believed.

· 10/06/2020 14:53

A domestically made Tesla Inc (NASDAQ:TSLA) vehicle in India could soon become a reality, if reports are to be believed.

What Happened: The Southern Indian state of Karnataka confirmed it is in preliminary discussions with Tesla to set up a manufacturing unit as well as a R&D center in Bangalore, which is known as the Silicon Valley of India, the Economic Times reported, citing a government official.

"It is going to be a long-drawn process. We are at it and we will keep the sustained dialogue going," the official reportedly said.

"We have briefed them about how Bengaluru is home to promising EV startups and also component makers and the advantages we offer."

In late September, Economic Times reported on news of Tesla holding talks with the Karnataka government over the setting up an innovation unit in Bangalore.

Last week, Elon Musk tweeted that an Indian market entry could be imminent in response to an inquiry from the unofficial account @TeslaClubIN. 

Related Link: Tesla Analyst: Seasonality Makes Spike In Q4 Deliveries Unlikely

Why It's Important: The development comes at a time when the Indian government is striving to promote EVs as a means to cut down on emissions.

Governmental policy envisages that about 30% of all vehicles on road should be electric by 2030.

A domestic manufacturing unit would also help Tesla circumvent the high import duties India levies on imported vehicles.

Benzinga's Take: Given that purchasing power in India is still wanting, at least from the perspective of buying premium vehicles, Tesla's Indian foray could mean the company taking a further hit to margins to make its vehicles affordable to Indian Yet there is an argument the company can make up for margin erosion with volumes.

How soon Tesla can gain a toehold in the Indian market depends on how it can work around the red tape and bureaucratic bottlenecks that are associated with doing business with India.

TSLA Price Action: At last check, Tesla shares were slipping 0.88% to $421.95.

Related Links: How Tesla's Chinese EV Market Is Worth $400 Per Share

Photo courtesy of Tesla.