India is the world’s third-largest market for new cars, following China and the United States, and two leading electric vehicle manufacturers are looking to capitalize on it with affordable models.
Tesla is in discussions regarding an investment agreement with the Indian government that would lead the U.S. automaker to establish a factory in the country with an annual capacity of 500,000 vehicles, as reported by a Reuters article last week. Tesla also intends to utilize India as an export base, shipping cars to other countries in the Indo-Pacific region, according to the report.
The factory would produce affordable electric vehicles starting from 2 million rupees, equivalent to $24,400 at the current exchange rate. This pricing is significantly less expensive than any of Tesla’s current models and a lower cost than Tesla could manage by importing cars to India, which would reportedly be subject to import taxes of up to 100%.
However, this target price is still more than twice the cost of India’s cheapest EV, the MG Comet, and 500,000 rupees (around $6,000) more than the best-selling electric car in the market, the Tata Nexon EV. Tata, based in India, also announced an electric car priced at $10,000 for its local market last year.
The journey to an affordable Tesla has taken time. In 2021, the company confirmed the development of a globally targeted electric vehicle in China intended to be more affordable. Later, CEO Elon Musk suggested that the project had been put on hold. In 2022, Tesla confirmed that a third vehicle platform would surpass the production of all its other vehicles combined, with cars costing half as much.
Meanwhile, China’s BYD plans to manufacture electric vehicles for the Indian market in partnership with a local company, Megha Engineering and Infrastructures, according to Reuters. The billion-dollar plan, recently submitted to Indian regulators, encompasses local battery production and a comprehensive range of electric vehicles, from basic hatchbacks to luxury models, according to the report.
BYD entered the Indian market in 2007, initially producing batteries and other components for mobile phone manufacturers. If successful in selling cars there, it would have a presence in all major global new car markets except the U.S., as noted in the report.
The company entered the European market last year and reportedly began supplying batteries to Tesla in limited quantities. While BYD has manufactured and sold electric buses in the U.S., it has struggled to establish itself in the passenger car business here.
BYD has long been an advocate of LFP (lithium iron phosphate) battery technology. In recent years, more automakers, including Tesla, have started to view it as an excellent option for affordable electric vehicles. BYD introduced its current generation of LFP battery technology with the Blade battery in 2020.
