Gigafactory’s expansion in China certainly closes the door on any possibility of a manufacturing situation in India
see photosNew facility will double Tesla’s capacity in China
Tesla has announced plans for a new production facility in China, right next to its Gigafactory in Shanghai. This new facility will add a capacity of 450,000 vehicles to the annual production of the plant. This would establish Tesla’s China Gigafactory as the center for exporting its EVs to the world. But it also means that it is highly unlikely that the world’s most valuable carmaker will ever make its electric cars in India.
Tesla is using its Shanghai Gigafactory as a hub for exporting electric cars to markets outside China, including the European market. Outside China, the US and Europe, the major automotive market is India that Tesla has not managed to reach. In 2021, Tesla created an Indian entity, however, it has been at an impasse with the Indian government which wants it to make its cars in India.
Tesla, on the other hand, wants to test the waters by importing its vehicles but wants a tax exemption. India has some of the highest import duties in the world for EVs, which Elon Musk has ridiculed in the past.
Tesla’s facilities in China are key to its global expansion plans
Recently, India’s Transport Minister, Nitin Gadkari indicated that importing Tesla’s EVs from China was not a reasonable option. He also said that tax breaks were also out of the question as the government would have to offer those benefits to other automakers like Hyundai and Mercedes who are making their EVs in India.
Tesla has acquired land in the Shanghai Lingang Special Area that will be an extension of the Gigafactory. In 2021, its Shanghai facility delivers 484,100 vehicles, accounting for more than half of the 936,000 global deliveries.
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While there is no deadline for the expansion, the message is clear, it wants to use its Shanghai Gigafactory as an export hub. It is therefore pushing for a tax break with the Indian government rendering its most affordable Model 3 highly uncompetitive compared to other electric cars in the countries if they were subject to taxes. But the standoff is expected to continue until the Indian government changes its stance, which is unlikely considering hostilities with China.
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