Tesla is building a second factory in Shanghai, making a manufacturing plant in India unlikely

Gigafactory’s expansion into China almost certainly closes the door to any possibility of a manufacturing situation in India

New facility would double Tesla's capacity in China

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New facility would double Tesla’s capacity in China

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Tesla has announced plans for a new production facility in China, right next to its Gigafactory in Shanghai. This new facility will add a capacity of 450,000 vehicles to the plant’s annual production. This would position Tesla’s China Gigafactory as the hub for exporting its electric vehicles around the world. But it also means that the world’s most valuable automaker is highly unlikely to ever manufacture its electric cars in India.

Tesla uses its Shanghai Gigafactory as a hub for exporting electric cars to markets outside of China, including the European market. Apart from China, the United States and Europe, the main automotive market is India, which Tesla has failed to access. In 2021, Tesla created an Indian entity, however, it is at an impasse with the Indian government who wants it to manufacture its cars in India.

Tesla on the other hand wants to test the waters by importing its vehicles but wants tax relief. India has some of the highest import duties in the world for electric vehicles, which Elon Musk has ridiculed in the past.


Tesla’s facilities in China are key to its global expansion plans

More recently, Indian Transport Minister Nitin Gadkari said importing Tesla’s electric vehicle from China was not a viable option. He also said tax breaks are also out of the question as the government should provide these benefits to other automakers like Hyundai and Mercedes who manufacture their electric vehicles in India.

Tesla has acquired land in the Shanghai Lingang Special Zone which will be an extension of the gigafactory. In 2021, its Shanghai plant delivers 484,100 vehicles, which also represents more than half of the 936,000 global deliveries.


Although there is no timeline for expansion, the message is clear it wants to use its Shanghai Gigafactory as an export hub. That is why he is pushing for tax breaks from the Indian government as his most affordable Model 3 would be made very uncompetitive against other electric cars in the countries if they were subject to taxes. But this blockage is likely to continue until the Indian government changes its position, which is unlikely given the hostilities with China.

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