Tesla India entry gains momentum

As Tesla accelerates its plans to enter India, its strategic moves steal the headlines.

Firstly, Tesla has signed a five-year lease for a showroom in BKC, Mumbai with another one set to open in Aerocity, New Delhi.

Media sources indicated, Tesla will be importing cars from Germany, but now as dynamics change, Tesla is looking for a potential partnership with Tata motors to assemble their cars in India. They are likely looking at a contract manufacturing tie-up with Tata Motors.

Tata Motors has in the recent past commissioned its new bought over plant at Sanand with nearly 4 lakh units of annual capacity aimed primarily for manufacturing Electric Vehicles. It has substantial excess capacity in this domain given it will end the year with ~65,000 volumes.

Therefore, this partnership with Tesla would be a Win-Win situation for both the OEMs as Tesla can get the benefit of assembling vehicles locally, significantly lowering the vehicle costs for consumers, while for tata motors collaborating with Tesla will improve plant utilisation levels and aid overall profitability.

However, it needs to be seen whether the Indian government in this context allows Tesla to import its cars at concessional tariffs in the initial period, since in the policy outlined earlier talks of concessional import duty of 15% was only applicable for OEM’s planning to set up a greenfield manufacturing plant in India in the prescribed timeframe.

Media articles also indicate that Tata Group companies, including Tata AutoComp, Tata Consultancy Services, Tata Technologies, and Tata Electronics, have emerged as key global suppliers to Tesla. 

Tesla has already signed a strategic deal with Tata Electronics for semiconductor chips and is reportedly sourced components worth ~US$ 2 billion from Indian suppliers in FY24.

Tesla in also looking for collaboration with Indian ancillary players for critical components such as wiring harnesses, electric motors, gearboxes, forgings, castings, and high-value electronics.
As per media sources, current component suppliers to Tesla include Samvardhana Motherson, Sona BLW Precision Forgings, Suprajit Engineering, Sansera Engineering among others.