Tesla to build its most affordable electric car in India: Report

Tesla representatives are set to meet India’s commerce minister this month to discuss plans to build a factory to produce what the company has described as an all-new $24,000 car, a person with direct knowledge of the matter told Reuters.

Tesla has expressed an interest in building a factory in India that would produce low-cost electric vehicles (EVs) for the local market and for export, the person said, adding that the company had indicated that it would be for the new vehicle. The discussions represent a sharp reversal for the company after efforts last year to reduce import taxes on EVs shipped to India were scuppered by calls from government officials to commit to making cars locally.

The meeting with the commerce minister would be the highest level discussions between Tesla and the Indian government since June when Elon Musk met India's Prime Minister Narendra Modi and said he intended to make a significant investment in the country.

The 2 million rupee ($24,000) EV Tesla representatives were said to have described in discussions about a potential Indian plant would be 25% cheaper than its current lowest priced offering, the Model 3 sedan which sells for the equivalent of just over $32,200 in China.

The $24,000 target price for the new Tesla vehicle was reported earlier this month by The Times of India newspaper.

Tesla did not immediately respond to a request for comment.

Electric vehicles currently account for less than 2% of total vehicle sales in India, now the world’s third largest auto market.

Reuters reported in May that Tesla executives visited India and held talks with officials on establishing a manufacturing base for cars and batteries in India.

Discussions with Indian government officials in New Delhi are scheduled to resume this month, two people with knowledge of the talks, who asked not to be named because the discussions remain private, told Reuters.

As part of that, Tesla representatives are set to meet Indian commerce minister Piyush Goyal, the first person said, and discussions are expected to centre around setting up an EV supply chain and discussing land allotment for a factory.

The commerce ministry did not respond to a request for comment.

Watch: Tesla to launch in India: Will it impact Mercedes-Benz’ EV plans?

Tesla has aggressively discounted its existing models since the start of the year while Musk has repeatedly said its long-term success will hinge on bringing down the cost of EVs sharply.

Tesla has said its next-generation vehicle platform will slash production costs by 50% and that multiple models - including an automated "robotaxi" - could be built from it, without detailing what those future models will be or their pricing.

A Tesla plant under construction in Mexico will produce vehicles on that lower-cost, high-volume platform, which the company has said it said it will take to other factories as well.

Tesla currently produces EVs in California and Texas. Outside North America, it has plants in Berlin and Shanghai.

The Shanghai plant is Tesla's largest, accounting for almost 40% of the automaker's global capacity. Plans to add additional capacity there are pending regulatory approval.