NEW DELHI: India got a rude shock when electric-car maker Tesla Inc. recently finalised a deal to build its own manufacturing plant in China. For months, Tesla had been exploring to set up a plant in India. The news should wake up the Indian government that wants all the cars in the country to be electric in 13 years—and has announced it would do whatever it takes to meet that target.
India has set for itself an ambitious target of having only electric cars by 2030. Recently, Union road transport and highways minister Nitin Gadkari spoke of bulldozing his way to the target at the annual convention of the Society of Indian Automobile Manufactures (SIAM). "We should move towards alternative fuel. I am going to do this, whether you like it or not. And I am not going to ask you. I will bulldoze it," Gadkari said.
While the advanced world moves towards replacing fossil-fuel vehicles with electric ones, India wants to take a leap. The target is, in fact, more daunting than in many advanced countries. For example, Britain will ban the sale of new petrol and diesel cars 10 years after India, from 2040.
While infrastructure, scale and technology are big challenges, the biggest it seems is the policy.
Citing sources, The Wall Street Journal reported a week ago that electric-car maker Tesla Inc. had reached an agreement to set up its own manufacturing facility in China. Tesla struck a deal with Shanghai authorities that would make it the first foreign automaker to build its own plant in China.
The Silicon Valley electric carmaker's wholly-owned manufacturing facility would be built in Shanghai's free-trade zone and could allow Tesla to dramatically lower the cost of its cars in China. China usually requires foreign automakers to set up joint ventures with local Chinese partners, which involves splitting profits and giving away some technology, though they also avoid import tariffs.
Tesla had said in June that it was exploring with government officials in Shanghai the possibility of opening a facility to build electric vehicles for the Chinese market.
But Tesla had also considered to build its plant in India.
A few months ago, Anand Mahindra, chairman of M&M and India's maverick entrepreneur who is constantly testing boundaries, goaded tesla founder Elon Musk on Twitter. Musk had tweeted about India's resolve to have only electric cars by 2030. Mahindra tweeted, "Time you got out here Elon. You don’t want to leave the whole market to Mahindra, do you? The more the merrier — and greener.” Musk tweeted back, "Good point :-)"
What made Tesla go to China first? The policy. It seems the Indian government was not willing to make an exception for Tesla when it came to the laws that requires foreign companies to source 30 per cent of their parts locally.
Tesla had initiated talks with the government to enter India through the single-brand retail route, which comes with several riders including mandatory sourcing of up to 30% of the value of goods sold in the country. Musk had also tweeted about the high import duty and sourcing requirements. "In discussions with the government of India, requesting temporary relief on import penalties restrictions until a local factory is built," he had tweeted on June 15.
Last year, Gadkari had visited the Tesla factory in the US. Despite mass appeal of Tesla in India and even interest at high levels of government, Tesla chose to set up a plant first in China. That was hardly an illustration of Indian government "bulldozing" its way to the all-electric target of 2030
Source: economictimes.indiatimes.com