In 2015, India’s Prime Minister Narendra Modi visited the California headquarters of Tesla and invited Elon Musk to set up its plant in India. In 2016, Minister Nitin Gadkari offered Tesla free land near Indian ports, which gave the EV giant yet another reason to set shop in India. Still, Tesla picked China for its first overseas Gigafactory.
In 2017, Tesla struck a deal with the Chinese government to build its Shanghai facility. This was following China’s sweet deal in the form of incentives. While other foreign automakers are subject to laws that require joint ventures with local Chinese partners that split profits to a degree and allow technology transfers, Tesla got an exemption, enabling it to establish a wholly-owned subsidiary. This reduced the barriers to entry significantly and enticed Tesla to invest heavily in China.
Furthermore, the fast-growing electric vehicle market within China offered Tesla a golden opportunity. The Chinese government has put in place strict legislation requiring that a certain percentage of the vehicles produced should be electric. This puts together a wholesome domestic market for electric vehicle development: making China the largest market for electric vehicles in the whole world.
While India is equipping itself with plans of an all-electric fleet by 2030, the electric vehicle policies were still in the works. This vacuum in policy left Tesla less inclined to trust such an investment. Also, China’s vastness in size and the rapidly expanding affluent consumer base made it more euphoric.
India can become a new player in electric vehicles; however, better market opportunities, solid incentives , and swift actions by China, attracted Tesla toward them for its global expansion.
Reference- Business Insider, Inside EVs, Economic Times, Money Control