Karnataka has pitched Bengaluru to Tesla, the world’s most valuable carmaker, as a potential location for a Gigafactory where it can manufacture electric cars and batteries, a state government official told ET.

Tesla has already held preliminary talks with the state for a research and innovation unit in the city, home to many of India’s electric vehicle (EV) startups such as Ola Mobility, Ather Energy, Mahindra Electric as well as units of Daimler and Bosch. The local unit of Toyota, which Tesla overtook to become the world’s most valuable carmaker globally in July, is also based in Bengaluru.

“We have offered them (Tesla) all support to set up a research and development centre as well as the manufacturing unit,” Gaurav Gupta, principal secretary of Karnataka’s commerce and industries department, told ET. “Bengaluru has a favourable ecosystem for electric vehicles and Tesla can leverage on that.”

The talks were preliminary and “it is going to be a long-drawn process. We are at it and we will keep the sustained dialogue going,” Gupta said. “We have briefed them about how Bengaluru is home to promising EV startups and also component makers and the advantages we offer.”

Tesla didn’t respond to queries sent on Saturday.

ET first reported talks with Tesla on setting up its innovation unit in Bengaluru on September 21.

Tesla CEO Elon Musk tweeted Friday that the company will enter the Indian market “next year for sure.” He thanked customers in the country for having waited since making bookings in 2016 for its electric cars. Several Indian startup founders such as Paytm’s Vijay Shekhar Sharma and Goqii’s Vishal Gondal paid a $1,000 advance to book Tesla cars ahead of the global launch.

This is not the first time Musk has talked of Tesla coming to India. In 2015, he tweeted that local demand for lithium-ion cells might make setting up a Gigafactory in the country a sensible decision in the long term.

In September, Musk unveiled plans to launch a $25,000 electric car, its cheapest model in three years, due to its ability to lower battery costs. Tesla previewed a small electric car prototype for China in January, when it announced plans to set up a design and research facility in the country. Since starting its Gigafactory in Shanghai, Tesla has sold more than 50,000 vehicles in the first half of the year, emerging as the top seller of electric vehicles in China, Nikkei Asian Review reported on Aug 25.

Analysts said expectations of a big-bang entry by Tesla into India should be muted due to the cost of the car as well as lack of infrastructure for electric vehicles in the country.

“Tesla coming to India would not have such a major impact on the market, because first of all it’s a very premium segment, maybe around Rs 40 lakh or so even for the Model 3. Range anxiety in the mind of car owners could be an issue for Tesla, despite the Model 3 offering over 500 km on a single charge,” said Aman Madhok, senior analyst at Counterpoint Research. “There’s no current infrastructure, there’s no government support, and I don’t think Tesla will invest so much in infrastructure because there are no economies of scale here.”

India’s electric vehicle market is expected to touch Rs 50,000 crore by 2025, financial services firm Avendus said in a report in July. Avendus expects sales of more than 3 million EVs, the majority of them two and three wheelers.

“We all accept that the future is electric, it is now time to embrace electrification as an opportunity to create a self-reliant and cleaner India,” the report said.

Karnataka was the first state to draw up an electric vehicle policy in 2017, hoping to generate investments of Rs 31,000 crore in manufacturing and research and development. Since then, 11 states, including Gujarat, Delhi and Maharashtra, have drafted EV policies.