Tesla Seen Looking at Battery Factory in India, as Well as EVs

Tesla has drawn up plans to manufacture storage-battery systems in India, sources have revealed.

The company has been talking to officials in New Delhi about setting up a factory to build electric vehicles (EVs), but two sources say CEO Elon Musk is also keen to make and sell the group’s “Powerwall” battery in India.

They said the company has submitted a proposal seeking incentives to build a factory where it can make their storage-batteries.

Tesla focus in recent weeks, though, has been to build a factory where it can make an electric vehicle priced around $24,000 and discussions have been overseen directly by Prime Minister Narendra Modi.

Its renewables push, however, has not been reported so far.

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Incentives for storage batteries may be limited to subsidies

In recent meetings in New Delhi, Tesla proposed supporting the country’s battery storage capabilities with its “Powerwall”, a system that can store power from solar panels or the grid for use at night or during outages, the sources, who declined to be named because the matter is confidential, said.

Although Tesla sought a number of incentives to set up a storage-battery factory, Indian officials said these would not be available, one of the sources said.

But they added that the government could help create a fair business model for the company by offering subsidies to people who purchase such products.

While both Tesla and the Indian government remain keen on the proposal, and New Delhi continues to review it, it is not certain if the plan will be realised, the first source said.

The Powerwall proposal is part of the US company’s plans for a broader presence in India, thinking beyond EVs, the second source said, adding that Tesla was keen to find residential as well as industrial customers for its battery storage systems.

“Large policy level calibration will be required. Tesla’s intent is to have the Powerwall business in India,” the source said.

Neither Tesla, the Indian government’s chief spokesperson nor the commerce ministry responded to requests for comment.

Power storage systems limited and costly

India has boosted electricity supplies to towns and villages but still faces peak-time shortages as demand surges. It is largely dependent on coal-based power generation as storage technologies are expensive and not yet widespread.

Last year, India faced its worst power crisis in more than six years due to coal transportation problems, while delays to adding coal and hydropower capacity have increased the risk of nighttime power cuts, when solar energy is not available.

The country is targeting an increase in non-fossil fuel power capacity to 500 GW by 2030, from 186 GW now.

Tesla’s Powerwall is a sleek unit around a metre high designed to be hung in a garage or outside a house.

During a 2015 visit to Tesla’s California campus accompanied by Musk, Modi reviewed the product and later said he had enjoyed discussing how battery technology could help farmers.

Powerwall is aimed at domestic and light commercial use but Tesla could look at developing larger solutions for industry if the India plan comes to fruition, the second source said, without elaborating further.

Indian officials have also conveyed that Tesla will have to work on reducing the cost of its battery storage products, the first source said, adding that the government could help to unlock the market with demand expected to be high.

With incentives, Powerwall costs more than $5,500 in California, with additional costs for solar panels. It is eligible for US federal tax credits and local state and utility incentives for solar and energy storage.

Powerwall users in Houston and Dallas, in a first, recently agreed to sell their surplus power back to the Texas electric grid.