Elon Musk Tesla Gigafactory Shanghai
Elon Musk at Tesla Gigafactory Shanghai

China holds more importance for Tesla’s growth than India in the electric vehicle market, despite India’s evolving policies and potential.

China has emerged as a powerhouse in electric vehicle (EV) and battery production, making it a pivotal market for Tesla, the world’s leading electric vehicle manufacturer. Here’s why China’s role is more significant than India’s in Tesla’s global strategy.

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China’s Dominance in Battery Production

China leads the global EV sales due to its extensive battery production capacity, a vital component for EV manufacturing. Tesla’s recent focus on China includes meetings with key players like Robin Zeng, chairman of CATL, a major battery supplier. CATL contributes significantly to Tesla’s battery supply, alongside other major automakers.

Tesla’s largest manufacturing unit, located in Shanghai, underscores China’s importance. The plant produces over a million units of Tesla’s popular Model 3 and Model Y annually. This gigafactory not only serves China but also supplies cars to other regions, highlighting China’s role as a key growth engine for Tesla.

India’s Nascent EV Market

India’s EV industry is still developing, with a historic reliance on battery imports. However, recent initiatives like the production-linked incentive (PLI) scheme for battery storage signal a shift towards domestic battery production. India aims to capture a substantial share of the global battery market by 2030.

India’s EV policy faced regulatory uncertainties in the past, impacting the industry’s growth. The sector has experienced flip-flops despite recent policy releases, including customs duty changes on vehicle imports. These fluctuations have posed challenges for global automakers eyeing the Indian market.

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Opportunity for Tesla Amid China’s Scrutiny

China’s EV exports, facing scrutiny in Europe and the US, open doors for India. Investigations into subsidies and threats posed by Chinese EVs to local markets suggest potential trade shifts. India’s focus on local manufacturing and regulatory stability could attract global players seeking alternative markets.

While China remains Tesla’s primary growth driver due to its established EV ecosystem and robust supply chains, India’s evolving policies and market potential present opportunities for future partnerships and growth in the EV sector.

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