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Tesla in talks to set up a research center in Bengaluru, India

Tesla held initial discussions with Karnataka government officials on September 10, who are looking for a possible investment by American electric automaker in a research facility located in Bengaluru, people familiar with the matter said.

A followup meeting is expected later this month, they said, in which the state officials are expected to present a detailed proposal to the automaker’s executives.

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

If the talks are able to bring positive results, then India will become the second country outside of the US where the automaker will have a research center.

Bengaluru hosts a number of local and global automakers such as Daimler, Bosch, and Mahindra Electric. It is also home to emerging 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 ($4.5 billion) in EV R&D and manufacturing. Since then, 11 states such as Gujarat, Delhi, Maharashtra, Tamil Nadu, Telangana, and Andhra have come up with their own policies.

Earlier, Tesla opened a Gigafactory in Shanghai. It sold 50,000 vehicles in the first half of the year emerging as the leading seller of electric vehicles in China, Nikkei Asian Review reported on August 25.

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 automotive company in the world, sells its cars in several markets in Europe, Latin America, Japan, Singapore, and Australia, apart from China.

India’s EV market is expected to cross Rs 50,000 crore ($6.8 billion) 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 ($2.04 billion) opportunity for India by 2025. Avendus expects over 3 million EVs to be sold in the country, with most of them being two and three wheelers.

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