Tesla's $1 billion India connection that powers its auto ecosystem

Like several other big companies, Tesla too started to de-risk its supply chain after the pandemic shock and looked towards Indian component makers

An increasing number of Tesla cars are now using components made in India, which was a favoured import destination for the Elon Musk-run company much before it decided to set up a plant in the country.

At least eight Indian suppliers are already working with the US electric vehicle giant, according to data from Bloomberg Suppliers database. The global major is believed to be sourcing anywhere between $1-2 billion worth of auto parts from India now.

Union commerce minister Piyush Goyal had said in September last year, “Tesla sourced nearly $1 billion worth of auto parts from India in 2022, with plans to double it in 2023.”

According to the Bloomberg supplier list, there are five-six automotive suppliers to the company including Samvardhana Motherson International, Suprajit Engineering, Sona Blw Precision Forgings, Varroc Engineering, and Bosch Ltd.

Apart from that, Hindalco Industries (for metals and mining), Goodluck India (for steel), and Valiant Communication (for technology hardware) are also part of Tesla’s global ecosystem.

There are other suppliers too who are not part of the Bloomberg list. They include groups with whom Tesla is already in talks before its India entry.

Business Standard contacted all these companies for their response. But no reply was received by the time of filing of this report.

An email sent to Tesla also went unanswered.

“Whoever is supplying has a non-disclosure agreement. From ACMA’s perspective, we welcome any new investments coming into the country from existing OEMs. The government of India, in its new policy, is giving guidance on localisation,” said Vinnie Mehta, director-general of the Automotive Component Manufacturers Association (ACMA) of India.

“Any customer coming to India is good news for all the automotive suppliers. In addition to that, more jobs will be created,” said a source from one of the above-mentioned companies. He did not wish to reveal if his firm was supplying components to Tesla.

At present, states like Gujarat, Tamil Nadu, Maharashtra, Rajasthan and Telangana are in talks with Tesla for its manufacturing unit.

“Nothing is finalised. For a global major like Tesla, a lot of factors like logistics will play a major role,” said a source aware of the development.

Since the company is dependent on the Far East and Western Europe for its imports and exports, port access time also plays a major role, where Maharashtra and Tamil Nadu have a natural advantage.

Tesla’s global rival Vinfast recently picked Tamil Nadu as its destination, as it takes less time compared to other states for imports and exports and also due to its existing automobile ecosystem.

“Availability of talent is also a major factor for such companies,” a source said.