Tesla Motors might assemble the new Model 3 in China, and that’s good news for India

Electric car sales are surging in China, thanks to its richest 1%, the ‘bao fa hu’ or explosive rich. The Chinese government has also incentivized electric vehicle production and sales in a measure to reduce China’s long standing pollution problem. Tesla might just grab this opportunity to have its own assembling plant in the country, and that’s good news for India.

Chinese customers have been going gaga over the new Tesla Model 3. Only last week Tesla co-founder and Chief Technical Officer JB Straubel was in Leipzig, Germany, where he said that if interest for the new Model 3 keeps on increasing, launching a factory in China would make a lot of sense.

Last year Elon Musk hinted at his desire to manufacture Model 3 cars in China. He pointed out later that it was a translation error, but also tweeted the possibility of a factory in China.

Foreign companies have been manufacturing in countries like China and India to avoid significant import duties that drive up the price of cars made outside the countries. In China this is often done by partnering with a local contractor. However, given that Tesla would like to keep its proprietary knowledge confidential, this measure might just backfire.

A Tesla factory in China in the next couple of years is good news for the country and other Asian markets. While the Chinese domestic market sold 20 million new cars last year, this would also mean Tesla cars would be more freely available across several Asian geographies, and prices would come down significantly.

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