Tesla's Elon Musk. Photo: AFP / Brendan Smialowski

Electric car giant Tesla Inc has decided to set up a manufacturing unit in Karnataka state, according to multiple media reports. State chief minister B S Yediyurappa said in a statement: “American firm Tesla will open its electric car manufacturing unit in Karnataka.”

The Elon Musk-owned company had on January 8 registered in Bangalore, the capital of Karnataka state, as Tesla India Motors and Energy to set up a research and development unit.

Bangalore is also home for global technology majors such as Infosys and Wipro and is also a hub for home-grown electric vehicle startups such as Ola Mobility, Ather Energy, Mahindra Electric as well as units of Toyota, Daimler and Bosch.

Tesla was reportedly in talks with five state governments in India, including Andhra Pradesh, Tamil Nadu and Maharashtra, before opting for Karnataka. It now has only one Gigafactory in Asia, in Shanghai, China.

In December last year, India’s Road Transport and Highways Minister Nitin Gadkari confirmed the US firm would start sales this year and take a call on manufacturing based on the response.

Recent reports suggested that the first model to come to India would be the Tesla Model 3 which would be priced at about 5.5 million rupees (US$74,813). However, for the price-sensitive Indian market, this price point will be on par with luxury cars and might be beyond the reach of most buyers.

Tesla will most probably handle sales channels directly and not involve any dealer, as it does in other parts of the world. It sells cars from its own showrooms, manned by its employees.

Musk has been interacting with Indian Twitter users for many years. He had tweeted in October that Tesla was ready to enter the Indian market next year.

“Next year for sure,” Musk said in response to a tweet that posted pictures of T-shirts with “India wants Tesla” and “India loves Tesla” printed on them. “Thanks for waiting,” he added.

India is looking to boost electric mobility with the twin objective of reducing air pollution and cutting down on fossil fuel imports. Many of its cities, including the capital New Delhi, figure among the most polluted in the world and vehicular emissions are one of the major reasons.

The country is also ramping up its charging infrastructure to encourage more people to use battery-operated vehicles. Tesla’s entry is expected to spur investments in this sector.