Tesla (NASDAQ:TSLA) is planning to explore potential locations in India for a new electric vehicle (EV) manufacturing plant with an investment ranging from $2 billion to $3 billion, as reported by the Financial Times on Wednesday.
TSLA shares fell 1.2% in premarket trading Wednesday.
This decision is seen as part of Tesla's strategy to diversify its market presence amid slowing EV demand and intensifying competition in its key markets, the United States and China, which has led to a decline in the company's first-quarter deliveries below expectations.
A team from Tesla's U.S. operations is scheduled to visit India by the end of April to evaluate possible sites for the facility.
The focus will be on states recognized as automotive industry hubs, including Maharashtra, Gujarat, and Tamil Nadu, according to the FT report.
This move comes after India recently reduced import taxes on electric vehicles for manufacturers committing to invest a minimum of $500 million and commence local production within three years.
Elon Musk, Tesla's CEO, has expressed interest in entering the Indian market for some time, but the Indian government wanted the carmaker to commit to local manufacturing.
Over the past year, Tesla representatives have engaged in discussions with Indian officials, with Musk meeting Prime Minister Narendra Modi in June.
Analysts believe Tesla's foray into India could encourage further investments in the EV sector and potentially benefit local auto parts manufacturers.