India, Southeast Asia race to attract billionaire Elon Musk

Leaders in India and Southeast Asia are directly appealing for investment from billionaire Elon Musk, CEO of Tesla, as the US electric car maker considers options to reduce its dependence on the Chinese market, according to Nikkei Asia.

India welcomes Tesla

Tesla is reportedly in talks to enter the Indian market and could invest nearly $30 billion (VND732,000 billion), both directly and indirectly, over the next five years, The Hindustan Times reported. This is the result of months of negotiations between Prime Minister Narendra Modi's government and Tesla representatives.

Specifically, Mr. Modi met with Mr. Musk in New York City (USA) in June 2023, a month after the Indian government was said to have given the green light for Tesla to enter the country's market. Indian Commerce Minister Piyush Goyal also visited Tesla's factory in California (USA) in November 2023.

Elon Musk attends the Viva Technology conference for startups in Paris, France, in June 2023.

New Delhi’s efforts are part of its “Make in India” campaign to boost domestic manufacturing. With a booming population, job creation is a major challenge for India. A growing electric vehicle industry could boost employment while reducing pollution and reliance on imported crude oil.

Tesla's plans in India have been a hot topic since it set up a local unit in January 2021. The South Asian country overtook Japan to become the world's third-largest auto market by new vehicle sales in 2022 and secured the position in 2023, according to Nikkei Asia.

Tesla has not officially commented on its specific plans for India. Backers of the project say the investment will serve several of New Delhi’s goals of local manufacturing, combating the climate crisis, integrating into new global supply chains and strengthening the India-US strategic partnership.

Several Indian media outlets reported that Tesla could make a final decision as early as this year, including building a factory with a production capacity of up to 500,000 vehicles per year in the South Asian country.

Southeast Asia also joins the game

Many other countries in Asia are also rolling out the red carpet for Tesla. Indonesian President Joko Widodo traveled to Texas in May 2022 to convince Mr. Musk to build an electric car factory in this Southeast Asian country.

Tesla Model Y electric car

Indonesia is known for its large reserves of nickel and other materials used in electric vehicle batteries. According to Nikkei Asia , Mr. Musk has previously expressed interest in working closely with Indonesia, acknowledging the significant potential of the market there.

Malaysian Prime Minister Anwar Ibrahim also had an online discussion about potential investments and other topics with Mr. Musk in July 2023.

Meanwhile, Thai Prime Minister Srettha Thavisin met with Mr. Musk in September 2023. Mr. Thavisin said his country could receive a total investment of at least $5 billion from Tesla and other American corporations. This raised speculation that the two sides made some progress after the meeting. The Tesla CEO visited Thailand in late November 2023.

According to Reuters, the wave of electric vehicle use in Thailand in recent years has also exploded with high demand. This is also one of the oldest markets in Southeast Asia.

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Fierce competition

The “pilgrimages” to see Mr Musk come as markets from the US, Europe and China to India and Southeast Asia are grappling with environmental concerns.

Nikkei Asia quoted Hirotaka Uchida, an expert at market consulting firm Arthur D. Little (Belgium), as saying: "Tesla is a pioneer in the electric vehicle sector. The company has a strong brand image and will bring greater appeal to countries, compared to these countries receiving investment from [electric vehicle company] BYD of China."

In the fourth quarter of 2023, BYD surpassed Tesla in global sales of electric vehicles and plug-in hybrids (vehicles that use both gasoline and electricity).

Tesla’s consideration of partnerships with India and Southeast Asia also comes amid efforts by the US to decouple its electric vehicle supply chain from China. Tesla currently produces about 950,000 vehicles a year, or about 40% of the world’s output.

Tesla also builds electric vehicles at two car factories in the US and one in Berlin, Germany. In 2023, the company announced plans to build one in Mexico. A fifth car factory in India or Southeast Asia could further balance the company’s supply chain.

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