Luxury cars, EVs hit fast lane in the South

Amid reports that global automotive giant Tesla is scouting for land to set up its manufacturing unit in the southern states of Tamil Nadu and Andhra Pradesh, industry experts and government officials believe the region's well-developed electric vehicle (EV) ecosystem and rising demand for premium vehicles make it an attractive proposition for the US luxury carmaker.

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The company is also scouting for land in Maharashtra and Gujarat, but experts stress that the lion's share of the growing demand for luxury automotive manufacturers is coming from South India.

"The EV ecosystem and luxury car demand are highest in the South; Tesla is in talks with us," said a source in the Andhra Pradesh government.

In 2024 alone, South India saw the highest rise in sales in the luxury segment, with Tamil Nadu reportedly registering a 19.3 per cent increase in premium car registrations from 2022-23. Bengaluru also recorded a 35 per cent surge in the ultra-luxury car market last year.

In terms of EV adoption, 45 per cent of the country's total EV sales come from South India, driven by a strong ecosystem of original equipment manufacturers, component suppliers, and battery manufacturing businesses based in Tamil Nadu, according to a report by Frost & Sullivan.

It is not just Tesla - its Vietnamese rival VinFast is also in the process of setting up its $2 billion manufacturing unit in Tamil Nadu's Thoothukudi, aiming to convert it into a global export hub, targeting markets such as West Asia and Africa due to its proximity to ports. Almost all players with EV ambitions are betting big on South India.