New Delhi: Tesla Motors will send a team to scout locations in India this month for a proposed USD 2-3 billion electric car plant, Financial Times reported, citing two people with direct knowledge of the electric vehicle company's plans.

This development comes after India lowered tariffs on higher-priced imported EVs last month for companies that commit to making them in the country within three years.

Notably, the tariff cut was a concession Tesla had been pushing for as a precondition for investing, according to FT.

The team is expected to come from the US by late April to study sites for the plant, focusing on states with existing automotive hubs, including Maharashtra and Gujarat in the west and Tamil Nadu in the south, the report stated, citing people with knowledge of Tesla's plans.

Some automakers have plants in the state of Haryana, neighbouring New Delhi, and one of the people said they thought Tesla might also scout potential sites around the capital.

However, the second person said the focus of Elon Musk's company would be on the other three states because they had ports, making it easier to export cars.

Notably, a confirmed Tesla investment would be a major boost for the Prime Minister Narendra Modi-led Bharatiya Janata Party (BJP) government ahead of Lok Sabha elections that begin this month, in which its record on business and job creation will be in sharp focus, the Financial Times reported.

During his state visit to the US, PM Modi pushed Elon Musk to invest in India. Following this, Musk said then that the electric car manufacturer would "be in India... as soon as humanly possible."

PM Modi has earmarked billions of dollars worth of government subsidies to promote manufacturing, including in critical industries such as EVs, where India's geopolitical rival China has a strong lead.

Tesla has told Indian officials it is considering building a smaller car in the proposed new factory than its current models, which would be priced at less than USD 30,000. It could then sell the model in India and export to Southeast Asia, the Gulf, Africa, and southern and eastern Europe, the report added.

The carmaker is developing a cheaper vehicle to go on sale late next year, but has not yet said where the car -- which has been dubbed "Model 2" by Tesla observers -- will be manufactured.

The potential expansion of Tesla's global factory network comes as growth in global EV sales slows. The group is also building a plant in Mexico that is expected to go online in 2026.

One of the people familiar with Tesla's plans said the company was considering beginning with a USD 2-3 billion investment in the Indian car plant. Suppliers would invest billions of dollars more, making this one of India's biggest inward foreign investments.

The company expected the factory to reach production of as many as 5,00,000 cars a year when it reached full capacity, the people said. Tesla might later also look at setting up its own battery plant, following the "gigafactory" model it has followed at its plants in California, Texas, Berlin, and Shanghai, where suppliers have set up shop next to or near the mother plant.

The Financial Times reported, citing an Indian official, that the government would formally invite applications for the EV tariff reduction scheme by the end of this month, under which eligible companies will be allowed to import up to 8,000 vehicles a year.

This report is auto-generated from a syndicated feed