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Due to the short development time of new energy vehicles, reducing the cost of vehicle building is what all automobile enterprises hope to achieve. Recently, the Indian government plans to provide more preferential policies in order to realize Tesla's early entry into the Indian market and promote the overall development of the local area.

Nitin Gadkari, India's minister of road transport and highways, told Reuters in an interview that if Tesla commits to producing electric cars in India, India will provide incentives to reduce Tesla's production costs. The transport minister did not give details of incentives, but promised that the cost of producing electric vehicles in India would be among the lowest in the world, at least lower than in China.

Earlier, it was revealed that Tesla registered a company in India a few weeks ago. Tesla plans to introduce its Model 3 electric sedan to India for sale, according to people familiar with the matter, which is expected to begin in the middle of this year. Tesla also plans to build another factory in India, tentatively located in Bangalore, a technology hub in Karnataka, India's third-largest city known as India's Silicon Valley.

In response to this news, the Indian Minister of Transport believes that instead of setting up assembly plants in India, it is better to contact more local suppliers and manufacture the whole product in India, and we can also provide higher discounts. The minister also mentioned that India is not only a huge market, but also a potential export hub, especially since about 80% of the world's lithium-ion battery components are currently produced locally in India.

If India successfully introduces Tesla to build a factory, it will not only effectively promote the development of local electric vehicles in India, but also effectively suppress the import costs for the production of imported electric vehicles, batteries and other parts, and also drive India's productivity. But India still faces a huge challenge in winning Tesla's promise to build a factory.

As we all know, Tesla can successfully achieve nearly 500,000 sales in 2020, and the Shanghai Super Factory established in China and the Chinese market play a leading role. Tesla certainly hopes to replicate the success stories of the Chinese market to India. After all, Tesla came to China to ask for money, land and policies. Under the market environment of huge development of new energy vehicles, Tesla realized soaring, and one-third of its sales volume came from the Chinese market.

However, India's electric vehicle market has just started, and the volume of electric vehicles is far less than that of the Chinese market. Data show that of the 2.4 million new cars sold in India last year, only 5000 were pure electric models. As the world's largest car sales country (20 million vehicles in 2020), China's sales of new energy models reached 1.25 million units for the whole year.

Not only in the new energy vehicle market volume, the two have a world of difference. India's industrialization level is also relatively limited. Not only is the industrial chain not as sound as China's, but workers are not as hardworking and willing as domestic workers. This will undoubtedly become resistance. Foxconn's experience in India can explain everything.

Of course, in 2018, Musk also said he wanted to build a factory in India, perhaps because he was optimistic about the future Southeast Asian market, or perhaps because of the lower local cost factor, but ultimately because India's regulatory policy environment was very strict, Musk's plan was cancelled. Now that the Indian government has expressed its willingness to give it more preferential policies, and the government has also adjusted the tariff structure, Musk's global strategic plan has undoubtedly been aroused again.

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