U.S. electric car giant Tesla is scouting potential showroom locations in New Delhi and Mumbai as it gears up to kick off sales in India later this year, according to sources familiar with the company’s plans.

Despite a dip in global vehicle deliveries in the first quarter, marking its first decline in nearly four years, Tesla remains committed to its global expansion strategy, targeting emerging markets like India.

The company aims to establish showrooms spanning 3,000 to 5,000 square feet (280-465 square metres) along with service hubs in both cities, one source disclosed. Tesla has also initiated the production of right-hand drive vehicles at its German facility, earmarking them for the Indian market, other sources revealed.

Last month, India slashed import duties on electric vehicles to 15 per cent from a previous high of 100 per cent, a move aimed at incentivising automakers to invest a minimum of $500 million and establish manufacturing facilities within the country.

Tesla’s CEO Elon Musk is anticipated to unveil investment plans and meet with Prime Minister Narendra Modi during his two-day visit to India starting Sunday. This visit follows their last meeting in New York in June, reports Economic Times.

The search for suitable locations began last month, with Tesla executives engaging in discussions with various real estate developers to explore potential sites in high streets and shopping malls, as per one source. The company is eager to commence construction to ensure the showrooms are operational by 2024.

Amidst slower growth in its primary markets, the U.S. and China, Tesla recently scrapped plans for a more affordable vehicle, a move that investors had anticipated to fuel mass-market growth.

However, the Indian electric vehicle market, ranked as the world’s third-largest, is poised for significant growth. Electric vehicles accounted for a mere 2 per cent of India’s total car sales in 2023. Yet, the government has set an ambitious target, aiming for electric vehicles to constitute 30% of all new car sales by 2030.