Tesla held exploratory discussions with Karnataka government officials on September 10, who are seeking a possible investment by the world’s most valuable carmaker in a research facility in Bengaluru, people familiar with the development told ET.

A followup meeting is expected later this month, they said, during which the state officials are expected to present a detailed proposal to the Tesla executives.

“Tesla has shown initial interest to invest in a research and innovation centre in Karnataka and the talks are at a preliminary stage,” said one of the people cited above, but didn’t elaborate further. Tesla CEO Elon Musk indicated in July that the company’s luxury electric cars will “hopefully” come soon to India.

If the talks fructify, India will be the second country outside of the US where Tesla will have a research centre. ET’s emails sent on Saturday to Tesla and Karnataka’s department of industries and commerce seeking comment remained unanswered till press time.

Bengaluru already hosts local and global companies such as Daimler, Bosch and Mahindra Electric. It is also home to promising EV startups such as Ola Electric, Sun Mobility and Ather. Karnataka is the first state to come up with an electric vehicle policy, hoping to generate investments of `31,000 crore in EV R&D and manufacturing.

Since then, 11 states including Gujarat, Delhi, Maharashtra, Tamil Nadu, Telangana and Andhra have brought out their own policies. In January, the American carmaker opened a Gigafactory— car and battery factory-—in Shanghai.

It sold 50,000 vehicles in the first half of the year emerging as the top seller of electric vehicles in China, Nikkei Asian Review reported on August 25. Also, in January, Reuters reported that Tesla in a recruitment notice on its official WeChat account had said it plans to open a design and research centre in China.

In July, Musk had tweeted that Tesla will look at another Gigafactory in Asia, outside of China, “but first we need to finish Giga Berlin (for Europe) and a second US Giga to serve eastern half of North America”. Tesla, which overtook Toyota in July as the most valuable automobile company in the world, sells its cars in several markets in Europe, Latin America, Japan, Singapore and Australia, besides China.

INDIA OPPORTUNITY
India’s EV market is expected to touch Rs 50,000 crore by 2025, financial services firm Avendus said in a report in July. Of this, battery, motor and controller together can be a Rs 15,000 crore opportunity for India by 2025. Avendus expects over 3 million EVs to be sold in India, majority of them being two and three wheelers.

“We all accept that the future is electric, it is now time to embrace electrification as an opportunity to create a self-reliant and cleaner India,” the report said. Musk hinted at Tesla coming to India as early as 2015, when he tweeted that local demand for lithium-ion cells might make setting up a Gigafactory in the country a sensible decision in the long term.

In 2016, Tesla had opened bookings for its Model 3 EV Sedan from India but has not delivered the EV to aspiring buyers such as Paytm founder Vijay Shekhar Sharma and GoQii’s Vishal Gondal. “Sorry, should be hopefully soon,” Musk had tweeted in July after Arvind Gupta, former CEO of MyGov asked him about the four-year delay in bringing Model 3 to India.

Unlike traditional automakers, which sell their cars and service them through a dealer network, Tesla sells the cars through its website and outlets. Musk had raised concerns over India’s FDI rules that mandated 30% sourcing of goods from India for single brand companies. However, the government amended the rules in October 2019 that allowed companies to source goods and services through their third-party vendors to meet the obligation.