Elon Musk’s New Asian Production Hub Might Not Be India!

Tesla needs no introduction. It has done to the realm of Electric automobile what Pepsi has done to the world of aerated drinks, what Apple has done to the world of smartphones and what, Ferrari has done to the concept of speed in sportscars.

Tesla is a brand that is revered, worshipped, deeply admired and where legions of 21st century auto geeks stand, then even lionised. That being said, there was little surprise then that Tesla’s entry into India was an event that was widely covered in mainstream media and written extravagantly about.

Perhaps it may not even be going off the mark to suggest that the very fact that Tesla registered its entity in India with an authorised capital of INR 15 lakh and a paid up capital of INR 1 lakh was- and perhaps still is- on the lips of all intrepid Tesla fans in the country and beyond.

A simple statement of fact that is etched in the minds of the world renowned electric car lovers!

As a matter of fact, there was more interest and understandably so, towards Tesla when it became known that no fewer than four (separate) Indian states had shown true inclination towards inviting the Elon Musk led company to manufacture in their respective regions. These being- Maharashtra, Telangana, Punjab as well as Bengal.

But then as it often happens with all fairytales, which often don’t have any regal endings, the only thing here was that there was no fairytale continuation with this one. The key reason being that Tesla that had sought a reduction in the import duties on electric vehicles, which turned out to be a condition, hasn’t really been agreed to, as on date.

Resultantly, what do we see? The truth is that while the famed American brand continues to consider India a key market, it really doesn’t consider the country as a manufacturing base or hub or anything of that sort.

Now that being told, while there are large manufacturing hubs already being created in regions like China and Germany, there isn’t anything of that sort in India, which could largely remain a market where state-of-the-art electric vehicles from the Tesla stable are simply imported.

Up to this point in time, there’s little clarity as to where India might lift the accelerator on import duties where it comes to getting Tesla vehicles. This comes at a time where noted minister Mr. Gadkari has clearly stated that the Elon Musk brand would actually benefit were it to manufacture in India whilst many customers who’ve already ordered a Tesla are yet to receive their machine.

All of that told, here’s what the Economic Times had to say on the matter of how India may no longer be the key focus of the brand’s Asia manufacturing hub:

With a friendly policy bolstering the country’s EV goals, manufacturers have started committing billions of dollars. LG Energy Solution, along with other companies, is investing about $9 billion to set up a supply chain — from mining to manufacturing — in the country. Together with Hyundai Motor Co., the firm is developing a battery plant, too.

Meanwhile, the world’s largest powerpack maker Contemporary Amperex Technology Co. is investing almost $6 billion in a battery project with state-backed PT Aneka Tambang Tbk and PT Industri Baterai Indonesia. Further up the value chain, China’s Zhejiang Huayou Cobalt Co. and PT Vale Indonesia Tbk announced last month they would work together on the former’s fifth nickel project in the country.

The move by companies across the EV supply chain into the Southeast Asia’s largest economy shows how important it is to be close to the source of raw materials that feed into manufacturing. If there’s one thing the past year of logistical screw-ups and delays has shown the industry, it’s that proximity is key. Even if global supply and demand is balanced on paper, moving industrial goods around has become expensive, slow and cumbersome.