Wooing electric vehicle titan Tesla: Four states pull out all the stops

Gujarat likely the front runner but TN, Telangana, Maha not far behind

As Tesla prepares to make its entry into India, state governments are leaving no stone unturned to woo the electric vehicle titan. Government sources revealed that Gujarat is currently leading the race to secure the project, with Tamil Nadu and Telangana hot on its heels. Not to be left behind, Maharashtra is also making a strong pitch for the industrial belt in Pune.

This development comes in the wake of a Financial Times report suggesting that a Tesla team from the US will soon be in India to scout for potential sites for the company’s planned $2-3 billion electric vehicle plant. 
 

Gujarat has emerged as a major automobile hub in the past 15 years through the presence of companies like Tata Motors, Honda Motorcycles and Scooters India (HMSI), and Hero MotoCorp, MG Motor, and JCB India among others. 
 

“Gujarat is the frontrunner at present. However, Tamil Nadu’s robust automobile ecosystem and Telangana’s aggressive incentives make them strong contenders. Maharashtra is also in the fray, pitching for Pune (the city is known for the presence of major auto companies like Bajaj Auto, Force Motors, Mahindra Auto, Mercedes, Volkswagen, General Motors/ Hyundai Motor India, and Fiat),” shared a government official, requesting anonymity.
 

Business Standard tried to reach out to the Gujarat industries department, but officials did not respond to phone calls and messages. 

The latest edition Vibrant Gujarat Global Summit saw investment proposals worth Rs 26.33 trillion for the state.
 

The news about Tesla’s plan to set up a plant in India comes on the heels of the Central government’s decision to slash import taxes on some EVs for companies that pledge at least $500 million (Rs 4,150 crore) in investment and a manufacturing plant within three years.
 

Tesla’s India plans coincide with a decline in its global sales. In the first quarter of 2024, Elon Musk's auto behemoth reported 386,810 global deliveries, a drop of 8.5 per cent year-on-year, largely due to stiff competition from local EV manufacturers in China.
 

In Telangana, its Industries and IT Minister D Sridhar Babu has already announced the state’s intent to attract Tesla and confirmed ongoing discussions. The state has been following Tesla's investment plans since December 2023.
 

“The state is ready to go to any extent in terms of bringing new investments like Tesla,” said a source. 

Earlier, Babu said: “Telangana with its industry-friendly policy is working with a progressive and futuristic vision by creating a world-class infrastructure and hassle-free approvals system to enable best-in-class companies like Tesla to do business in the state.” 

Tamil Nadu's trump card is its thriving automobile ecosystem. “Tamil Nadu is the first port of call for any company looking to invest,” said a source. 

The state has attracted two major automobile investments in the past three months. Vietnam-based EV player VinFast, a Tesla rival in the global market, has begun work on its Rs 16,000 crore manufacturing facility at Thoothukudi. This was followed by Tata Motors and the Tamil Nadu government signing a memorandum of understanding to set up a manufacturing unit in Ranipet near Vellore, with an investment of Rs 9,000 crore.

The new EV policy proposes to cut import duties for interested electric vehicle makers to 15 per cent from the current 70 per cent or 100 per cent on vehicles with a CIF (cost, insurance, and freight) value of $35,000 and above for a period of five years. In terms of attracting FDI in India, Maharashtra, Karnataka, Gujarat, Delhi, and Tamil Nadu are leading the pack.

What they offer

Gujarat: It is already hosting leading automobile companies like Tata Motors and MG Motors. Maruti Suzuki India is investing Rs 35,000 cr on setting up a new car manufacturing plant in the state

Tamil Nadu: Has a thriving automobile ecosystem; recently secured investments from VinFast and Tata Motors

Telangana: It is willing to line up aggressive incentives

Maharashtra: Pune is a hotspot among auto players with the presence of the likes of Mahindra Auto, Mercedes, and Volkswagen