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Giga India! Elon Musk wants Tesla Model 2 electric car production in India - reports

Tesla making its move in India

Tesla CEO Elon Musk has already teased two new products at the company's annual shareholder meeting earlier this year, one of which is likely the long-expected entry-level 'Model 2', designed to dramatically lower cost-of-entry to the ground-breaking electric car brand.

Now Reuters is reporting a second round of talks between Tesla executives and Indian government officials in New Delhi focused on establishing a manufacturing base for cars and batteries in India, now the world's third largest automotive market.

In 2022 Telsa lobbied the Indian government to reduce import taxes on EVs, but the administration instead called for a commitment to local manufacturing.

And according to Reuters' sources, "Tesla has expressed an interest in building a factory in India that would produce low-cost electric vehicles (EVs) for the local market and for export."

With a projected supply footprint taking in much of the Indo-Pacific region, annual capacity will likely land at around half a million vehicles.

Musk has flagged a mass-market, entry-level Tesla as far back as 2020, stating at the time that "this has always been the dream since the beginning of the company," and earmarked a three-year timeframe for launch of such a model.

According to Reuters, electric vehicles currently account for less than two per cent of new vehicle sales in India. So, as well as exports, the domestic market potential for budget-priced Teslas produced in India is vast.

Musk signaled his intention of making a "significant investment" in India when he met with Prime Minister Narendra Modi in New York in June this year.

With a projected supply footprint taking in much of the Indo-Pacific region, annual capacity will likely land at around half a million vehicles. With a projected supply footprint taking in much of the Indo-Pacific region, annual capacity will likely land at around half a million vehicles.

India's Commerce Minister, Piyush Goyal, is set to be involved in the upcoming discussions, the scope of which is expected to include supply chain infrastructure and potential factory locations.

Tesla has claimed its next-generation EV platform has the potential to halve production costs with the simplified chassis underpinning multiple new models.

Worth noting construction of a Tesla 'Gigafactory' in Monterrey, Mexico (joining existing facilities in California, Texas, Berlin and Shanghai) is about to commence with the lower-cost, high-volume platform central to its operating model.

Musk has previously hinted at a starting price of around US$25,000 for the 'Model 2', which means a price of AU$37,500 on a direct currency conversion.

This would make it Australia's most affordable electric car, undercutting budget-focused offerings like the BYD Atto 3 (from AU$48,011), GWM Ora Cat (from $44,490 drive-away) and MG4 (from $44,990 before on-road costs).

A mid-US$20K price would also position it below the Tesla Model 3 (from $60,900), already the country's most popular EV.