Tesla agrees in principle to establish a local vendor base in India

Shares of Tesla Inc (NASDAQ: TSLA) climbed to a year-to-date high this morning after CEO Elon Musk agreed in principle to set up a local vendor base in India.

Here’s what we know so far

The Nasdaq-listed firm will first start assembling its electric vehicles in India and then follow up with localising its supply chain, reported the Financial Express on Wednesday.

In the meantime, the Indian government has agreed to let Tesla benefit from concessions on import of necessary components.

The government is willing to give time for setting up a domestic vendor base but Tesla will have to indicate a period by which the duty concessions on components granted to it will come to an end.

The news arrives only days after Musk reportedly signalled plans of expanding business in China as he visited the country and met with its Foreign Minister Qin Gang.

Tesla is now eligible for full tax credit

Tesla shares are cheering also because the Internal Revenue Service confirmed today that all of its Model 3 and Model Y vehicles now qualify for the full $7,500 tax credit under “IRA” – the Inflation Reduction Act.

So far, the Model 3 was eligible for tax credit worth only half of that ($3,750). It, however, remains unclear what Tesla did to align its electric vehicles with the requirements laid out by the IRA.

The Model 3 now starts at about $32,000 that makes it cheaper than the 2023 Toyota Camry XLE Hybrid. A day earlier, Piper Sandler analyst Alexander Potter said the Tesla stock had upside to $280.

His price target suggests another 25% increase from here.