The possibility of Tesla establishing a manufacturing plant in India, as hinted by Errol Musk during his recent visit, has reignited the conversation around electric vehicle (EV) adoption and India’s aspirations to be a global hub for sustainable mobility. While Elon Musk’s father’s comments are not official company announcements, they reflect an underlying optimism and an unmistakable trend: India is steadily carving out a space in the future of mobility. India’s EV landscape is poised for exponential growth. With an ambitious target of achieving 30% EV penetration in passenger vehicles and 70-80% in two-wheelers, three-wheelers, and commercial segments by 2030, the country is moving swiftly from policy intent to market execution. This transition is driven by the urgency to cut carbon emissions, reduce oil dependency, and create new economic opportunities. Yet, the question remains: can global players like Tesla see India not merely as a market for showrooms, but as a serious manufacturing hub? And if so, what needs to be done to make this vision a reality? Tesla’s global brand appeal and cutting-edge technology could provide a vital fillip to India’s EV ecosystem. Tesla’s presence would not only boost local manufacturing and generate employment but also catalyse innovation across the sector. However, Elon Musk’s own caution—balancing the interests of Tesla as a public company with India’s national interests—underscores the complexity of the conversation. Historically, Tesla’s approach to international markets has been deliberate and measured. The company has set up Gigafactories in key geographies like China and Germany only after careful consideration of local supply chains, regulatory frameworks, and market dynamics. India, with its vast domestic market and growing appetite for EVs, certainly presents an attractive opportunity. But for Tesla, entering India’s manufacturing space will hinge on whether the policy environment can be made more predictable, stable, and investment-friendly. On this front, India has already made significant strides. The recently introduced Production Linked Incentive (PLI) schemes for advanced chemistry cell batteries and auto components provide lucrative incentives for local manufacturing. The Faster Adoption and Manufacturing of Electric Vehicles (FAME) program and various state-level subsidies are also creating an enabling ecosystem for EV adoption. Yet, as Union Heavy Industries Minister H.D. Kumaraswamy rightly noted, companies like Mercedes Benz, Skoda-Volkswagen, Hyundai, and Kia have shown serious manufacturing intent, while Tesla seems content, at least for now, to limit its Indian ambitions to showrooms.
Why the hesitation? Tesla has long advocated for lower import duties on its vehicles to test the Indian market. India, meanwhile, has been firm in its position that genuine interest in the market should translate to local manufacturing, not just imports. This policy stance is driven by India’s broader economic and employment priorities: to become a self-reliant manufacturing powerhouse and not merely a lucrative sales destination. Elon Musk’s previous conversations with Prime Minister Narendra Modi—including their discussions in Washington D.C. last year—point to a strategic alignment between Tesla’s technological leadership and India’s green ambitions. But bridging the gap between promise and delivery will require careful negotiation. India’s government will need to strike the right balance between offering competitive incentives and ensuring Tesla commits to genuine domestic value addition. Beyond incentives, India’s broader infrastructure readiness will also play a crucial role. The charging infrastructure—while expanding rapidly—remains a work in progress. Supply chain issues for critical minerals, battery technology localisation, and the capacity of Indian auto ancillaries to meet Tesla’s exacting standards are factors that must be addressed. These challenges are not insurmountable, but they do require coordinated policy support and substantial investment in skill development, R&D, and ecosystem-building. India’s EV aspirations are not just about economic growth—they are also about climate leadership. The country’s renewable energy capacity is growing, providing a green grid for EVs to plug into. A Tesla plant in India would not just produce cars; it would also symbolise India’s broader green ambitions. Errol Musk’s comment that “there has to be a Tesla plant in India” is a sentiment that resonates well with India’s vision for a green, self-reliant future.
However, it’s important to note that Tesla is not the only player in town. Homegrown champions like Tata Motors and Mahindra are already making significant inroads in the EV space. Meanwhile, foreign players like Hyundai and VW are preparing to ramp up local EV production. In this context, Tesla’s entry would not be about dominance, but about complementing and catalysing a competitive, innovation-driven market. At the same time, the recent political developments in Bangladesh—hinted at by Errol Musk—illustrate the larger geopolitical stakes in this conversation. The growing ties between Pakistan, China, and a more radicalised Bangladesh have implications for India’s energy security and strategic calculus. A Tesla plant in India, situated in the broader context of the Indo-Pacific competition, would be a clear signal that India is not just a consumer market but a serious player in the global green economy. For Tesla, India offers both a challenge and an opportunity. The challenge lies in navigating a complex policy and market landscape. The opportunity lies in shaping a market of 1.4 billion people on the cusp of an EV revolution. For India, Tesla’s presence would be more than just another investment—it would be a reaffirmation of India’s technological and environmental aspirations. As the world’s largest democracy charts its green future, the decision to welcome Tesla as a manufacturing partner must be anchored in mutual respect and shared interests. If India and Tesla can indeed “work something out that is beneficial to both,” as Errol Musk hopes, it would not just be a win for the two parties—it would be a win for the planet.