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Indian suppliers gain prominence in Tesla's global supply chain | Hindustan Dot
Technology

Indian suppliers gain prominence in Tesla’s global supply chain

According to data from the Bloomberg Suppliers database, several Indian suppliers have established themselves as key exporters of finished components to the renowned US electric vehicle (EV) giant, Tesla. Notable companies such as Samvardhana Motherson International, Suprajit Engineering, Sona BLQ Precision Forgings, Varroc Engineering, and Bosch Ltd. are among the Indian suppliers contributing to Tesla’s global supply chain. Additionally, Tesla has recently formed a strategic agreement with Tata Electronics to acquire semiconductor chips, signaling the company’s interest in expanding its supply chain in India.

While estimates suggest that Tesla currently procures auto parts worth $1-2 billion from India, Minister Piyush Goyal revealed during his visit to Tesla’s plant in Fremont, California, in September last year that the company intends to nearly double its procurement of Indian auto parts to $1.9 billion by 2024.

The surge in Tesla’s sourcing from India can be attributed to factors like increased volumes, specific product requirements, and the broader trend of sourcing from countries like India, Vietnam, and Mexico, particularly for commodity parts. Furthermore, India’s reduced import tax on certain EV models and the requirement for manufacturers to invest in local production have incentivized Tesla to consider establishing manufacturing operations in the country.

As discussions continue with multiple states for the potential establishment of Tesla’s manufacturing unit, industry experts note that access to ports may play a significant role in determining the final location choice. Maharashtra and Tamil Nadu are regarded as having a natural advantage in this aspect.

The growing integration of Indian components into Tesla vehicles has also led to notable gains in the stock of certain auto ancillary companies. However, it is important to note that there are additional suppliers not listed in Bloomberg’s database, such as SKF India and Sandhar Technologies, which have longstanding partnerships with Tesla.

Overall, Tesla’s increasing reliance on Indian suppliers and the potential shift in manufacturing to India highlight the country’s significance as a high-quality alternative to China in the EV industry.

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