Why Tesla Chose Bangalore for its Manufacturing Unit

Alan Joseph Alan Joseph
Mar 06, 2021 5 min read
Why Tesla Chose Bangalore for its Manufacturing Unit

In 2020 the Transport Minister, Nitin Gadkari had announced that the U.S based Electric Vehicle company Tesla would enter in India. He told that in the beginning they would try to sell some cars and depending on the response of the sales they would start their R&D center in India.

After several years of delay, Tesla finally entered in India. On 12 January 2021, the company officially announced its arrival. They have registered in Bangalore, Karnataka by Teslaโ€™s registrar of companies (Roc). The companyโ€™s registered name is Tesla India Motors and Energy private Limited. It is considered as a foreign subsidiary registered in India.

The Chief Minister of Karnataka, B.S Yediyurappa tweeted happily and gave a warm welcome. But there are reasons as to why the company chose Bangalore to set up its R&D center.

R&D of Automotive companies
Talent Pool
Policy Support
FAQ

R&D of Automotive companies

Bangalore has a collection of technical and R&D centers. It accounts for more than a dozen automotive companies in the country. Bangalore has operational R&D units of automotive brands such as Mercedes-Benz, General Motors, Great Wall Motors, Mahindra & Mahindra, Continental, Bosch, Volvo, and Delphi.

Bangalore has a lot of electric vehicle startups as well. The Karnataka Government states that there are more than 45 electric vehicle startups that are based in Bangalore. Startups like Ather Energy, Mahindra Electric, Ultraviolette Automotive are mostly concentrated on the two-wheeler segment.

Ola Electric which announced recently that it is going to enter into the automotive sector is also based in Bangalore. Since there are a lot of technical and R&D units of the biggest companies and electric vehicle startups, Tesla would have chosen Bengaluru as its manufacturing unit.

Number of Tesla vehicles delivered worldwide
Number of Tesla vehicles delivered worldwide

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Talent Pool

Bangalore is known as the IT Hub, the district has headquarters of companies like Infosys, Wipro, Accenture, TCS, and many more. Bengaluru has around 3,00,000 IT students studying in various colleges across the country.

Tesla will be able to benefit from the huge talented IT and engineering graduates in Bangalore. Automotive companies have used the Indian R&D centers to work on projects not only for India but even projects for other countries including China, Europe, and the U.S.

Software Engineers are working with Mercedes Benz in projects such as developing driverless cars. Great Wall Motors, the Chinese company has set up its R&D center in Bangalore, to work on their Electric Vehicles.

Automotive brands have already set up and are using the talent of Karnatakaโ€™s Capital. They have seen the outcome over the years. Tesla would also have foreseen the IT and the engineering talent available in Bangalore, being one of the reasons to set up its unit in Karnatakaโ€™s capital.


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Policy Support

Other than a home for the major automotive companies, the state has certain policies. The policies act as one of the major reasons for Tesla to set up its unit in Bangalore.

Karnataka is concentrating on setting up an Electric Vehicle Hub in the State. It has allocated around $3 Billion (around 219 crores) for setting up an electric vehicle hub, lithium-ion cell, and battery manufacturing unit which includes Electric vehicle manufacturing bases in Hubbali and Dharwad. It is 400 km from Bangalore.

Karnataka had approved a new policy in 2017 which is the โ€œElectric Vehicle and Energy Storage Policyโ€. The state aims to create around 55,000 employment and attract investment of Rs 31,000 crore. To reduce dependency on fossil fuels and reduce its carbon footprint, the union government has unveiled its vision to make the country an all-electric vehicle market by the year 2031.

The state also provides a lot of incentives for setting up Electric Vehicle plants. It provides incentives such as reimbursement of land conversion fees, an investment promotion subsidy, 100 percent exemption on stamp duty, and many more. This would be the greatest advantage for Tesla. It must have been the easiest way to enter the country.

FAQ

Who is Tesla's biggest competitor?

The Chinese EV maker Nio is one of Tesla's biggest competitor.

Who sells the most electric cars in the world?

Tesla sells the most electric cars in the world.

What is the Valuation of Tesla?

The US Electric car maker Tesla is worth about $700 billion as of 2020.

Tesla Model 3 is the world's most popular electric car.

Conclusion

In 2018, Elon Musk the CEO of the company had said that certain government regulations are making it hard for them to enter the country. He also mentioned that the company required 30% of some raw material to be available locally for manufacturing and India lacked these. But, now different automobile industries are setting up their plants and companies in India, also Apple have started their manufacturing unit in India.

Elon Musk has a huge number of fans in India and he is moreover known as the real Tony Stark. This shows that the company has huge potential in the country.

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