Tesla is gearing up to explore potential locations for a new electric car plant in India, with plans to dispatch a team from the United States by late-April. The proposed investment could range between $2 billion to $3 billion, according to sources familiar with the matter cited by the Financial Times.

This move by Tesla coincides with a shift in the electric vehicle (EV) landscape, where demand is tapering off in its primary markets of the U.S. and China, while competition intensifies. Consequently, Tesla witnessed a decline in first-quarter deliveries, falling short of expectations.

The company is eyeing Indian states known for their automotive clusters, including Maharashtra, Gujarat, and Tamil Nadu, the report mentioned.

Despite requests for comment, Tesla has yet to respond to inquiries from Reuters.

India recently slashed import duties on select EVs manufactured by companies committing to invest a minimum of $500 million and kickstart local production within three years. This regulatory change was viewed as bolstering Tesla’s prospects in the Indian market.

For years, Tesla has been eager to make inroads into India, but government stipulations demanded a commitment to local manufacturing.

India’s EV sector, while still relatively modest, is on the rise, with domestic giant Tata Motors leading the charge. In 2023, EVs constituted approximately 2% of total car sales in India, with the government aiming for a 30% share by 2030.

Tesla’s potential entry could catalyze further investments in EV infrastructure and benefit local auto component manufacturers, analysts predict.

Over the past year, Tesla representatives have engaged in discussions with Indian government officials, including a meeting between CEO Elon Musk and Prime Minister Narendra Modi in June.

In July last year, Tesla expressed interest in establishing a factory in India to produce an EV priced at $24,000. Additionally, it advocated for reduced taxes on higher-end models intended for the Indian market, as per previous reports from Reuters.