Tesla founder Elon Musk has said the company might set up a Gigafactory in India to make lithium ion batteries. “Given the high local demand, a Gigafactory in India would probably make sense in the long term,” Musk tweeted.

The plan, if it materialises, will give a boost to Prime Minister Narendra Modi’s push to get Tesla to share battery technology for powering homes in rural India.

During his visit to the Tesla campus in Silicon Valley last month, Modi had discussed with Musk the potential of setting up a battery-making facility, as well as initiatives in other renewable energy technologies, to address India’s power woes. Modi has set an ambitious target of generating 100 Gw of solar power by 2022.

As of October 22, India had commissioned solar power plants with an overall capacity of 4.57 Gw. The country has the potential to generate 759 Gw of solar power, according to a study by Deloitte and the Confederation of Indian Industry.

Tesla manufactures a power storage device, the PowerWall. But its cost is high and production capabilities relatively low.

Still, with India pushing renewable energy technologies such as solar, it is imperative to support such initiatives with low-cost and efficient power storage.

A Gigafactory, which will produce more batteries than the world’s overall production this year, is being built in Nevada in the US. The lithium-ion batteries to be produced there will power Tesla cars, as well as PowerWalls.

On Tesla cars, Musk said, “Auto import duties are prohibitively high. Hoping for a special category for EVs (electric vehicles)…Most of our discussion (with Modi) was on batteries.”



Industry experts say a lithium ion battery factory at massive scale will bring down prices and increase mass adoption, crucial for storage of renewable energy generated through solar or wind. Vineet Mittal, managing director of Welspun Energy says India has the biggest requirement for battery technology for storage than even the developed nations.

"Anyone with disruptive technology for battery storage whether it is Tesla or Panasonic which can provide at price point that is cost effective is welcome. India needs this for distributed power generation in renewables and electrification in rural areas," said Mittal, who is also the chairman of the Assocham Solar Task force.

Ather Energy, a Bengaluru-based electric vehicle maker that has investments from Flipkart founders Sachin and Binny Bansal, expects a Tesla factory could spur more battery factory investments in the country.

“In fact Tesla coming to India will be a bigger PR thing. If you take a 5 year window which Tesla will need to setup a Gigafactory in a place like India, we’re going to be seeing a lot more activity. It’s not going to be just Tesla alone. We will see a lot more players getting in,” Tarun Mehta, co-founder and CEO of Ather Energy. “Without many people realising it, battery production that is cell production is going to be the biggest industry to exist over the next decade.”