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Tesla takes its first step into India

(ATF) Ending years of speculation and tweets, electric carmaker Tesla has finally entered India by registering a subsidiary, Tesla Motors India and Energy Private Ltd in Bengaluru, in the state of Karnataka.

The company was incorporated on January 8 in the central city, which is a hub for global technology companies. It has three directors including David Feinstein, currently the director of global trade and new markets at Tesla, according to the Registrar of Companies (RoC) in India.

The two other directors are Vibhav Taneja, who would be the chief accounting officer, and Venkatrangam Sreeram, the company said in its RoC filing.

“Karnataka will lead India`s journey towards Green Mobility. Electric Vehicle Manufacturer Tesla will soon start its operations in India with an R&D unit in Bengaluru. I welcome @elonmusk to India & Karnataka and wish him all the very best,” the state’s Chief Minister BS Yediyurappa tweeted on Tuesday.

Karnataka is currently a hub of several electric vehicle makers, such as Ather Energy and Mahindra Electric. In December, electric mobility solutions and services company SUN Mobility also announced plans to roll out 100 battery swapping stations in Bengaluru by the end of 2021.

R&D centre, second outside US

Tesla’s Indian operations will start with a research and development centre, its second outside the US. The other R&D facility is in Shanghai, in eastern China, where it has a Gigafactory to make electric cars.

While no location has yet been finalised for Tesla to set up a manufacturing plant in India, Tesla is in touch with many state governments like Maharashtra, Gujarat, Tamil Nadu and Andhra Pradesh to build plants in India, according to reports.

Tesla CEO Elon Musk, the world’s richest man, tweeted last month that the company would be present in India later this year.

In October last year, Musk, who overtook Amazon founder Jeff Bezos as the world`s richest man with a whopping $195 billion net worth last week, forecast that the electric carmaker was ready to enter the Indian market in 2021. “Will release order configurator probably in January (2021),” he said.

But he also criticised the country’s foreign investment structures. “Would love to be in India. Some challenging government regulations, unfortunately,” Musk tweeted once last year.

The move comes as Indian Prime Minister Narendra Modi is pushing the production and use of electric vehicles to reduce the country’s oil dependence and cut down on pollution.

To boost investment, India plans to offer $4.6 billion in incentives to companies setting up advanced battery manufacturing facilities.

Besides electric vehicles, Tesla, which also claims to be a clean energy advocate, makes battery storage from home to grid-scale, plus solar panels and roof tiles.

Tesla officials held talks with the Karnataka government last September about the opening of a research facility in Bengaluru (formerly known as Bangalore).

The tech-savvy Karnataka is the first state in the country to have an electric vehicle policy to woo investments in the sunrise sector. A slew of startups like Ola Electric, Sub Mobility and Ather have set up operations in Bengaluru.

Traffic jam?

While Indians can rejoice over Tesla’s entry, sceptics are also wondering if Tesla cars will have ‘teething problems’ on India’s bumpy roads.

On the other hand, a slew of electric cars are slated for launch this year, so Tesla could be caught in a traffic jam as well.

With close to a dozen electrics car models from the stables of BMW, Porsche, Audi, as well as local carmakers like the Tatas and Mahindra slated to hit Indian roads in 2021, Tesla may have to jostle with many competitors to grab a share of the market.

Affordability could act as a dampener too.

But analysts also say the entry of the high-profile carmaker could give a boost to the EV sector that spurs a jump in demand.

Besides, Tesla’s entry into India will be good for India’s ambition to be a global hub for manufacturing electric vehicles over time.

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Indrajit Basu

Indrajit Basu is an India-based correspondent for Asia Financial and wears two hats: journalist and researcher (equity). Before joining AF he reported on business, finance, technology, wealth management, and current affairs for China Daily, SCMP, UPI, India Today Group, Indian Express Group, and many more. He is also an award-winning researcher. If he didn't have to pay bills, he would be a wanderer.

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