Tesla turns to Indian auto parts suppliers to diversify from China
ECONOMY & POLICY

Tesla turns to Indian auto parts suppliers to diversify from China

Indian auto parts manufacturers are becoming favoured suppliers for Tesla Inc as the company seeks to reduce its reliance on China, according to sources familiar with the matter. Tesla is reportedly willing to pay a premium for these components. The electric car giant currently procures various India-made parts, ranging from small plastic components to complex differential systems and wheel hubs. Industry data from Mint indicates that, in the 2022-23 period, 30 component manufacturers, including Indian firms and multinational companies with operations in India, exported parts valued at $135-150 million to Tesla. However, this figure is expected to increase when considering additional sales by Tier-2 and Tier-3 suppliers.

Key players in this supply chain include Sona Comstar, the largest Indian supplier for Tesla, along with Graziano Trasmissioni India (a DANA group company), Tata AutoComp Systems, CISWW Engineering India, and Bharat Forge. The details of these suppliers' business relationships with Tesla remain undisclosed due to non-disclosure agreements.

In September, India's commerce and industry minister, Piyush Goyal, stated that Tesla had sourced nearly $1 billion worth of auto parts from India in 2022 and was on track to double this amount in the following year. Goyal's recent visit to Tesla's manufacturing facility in Fremont, California, coincided with discussions about a potential new national electric vehicle (EV) policy in India, which could include reduced import duties on EVs if foreign automakers like Tesla commit to local manufacturing.

Tesla's move to diversify its supplier base away from China is driven by a desire to mitigate supply chain risks amid ongoing tensions between the U.S. and China. While China has lower raw material costs, Tesla views India as a quality alternative, even if it involves slightly higher prices. The company's outsourcing to India includes complex machine parts, reflecting a broader trend of sourcing from countries like India, Vietnam, and Mexico, especially for commodity parts.

The Indian government is actively encouraging global EV manufacturers to invest in the country, positioning India as a hub for talent and manufacturing in green mobility solutions. Reports suggest that a new national EV policy may lead to lower import duties for EVs up to a specified price level, incentivising companies to engage in local manufacturing within the next few years. This aligns with Tesla's interest in targeting the mass-premium segment of passenger EVs in India.

"Join industry leaders at RAHSTA Expo, India's premier platform for roads, highways and traffic infrastructure. Register now to explore innovations, network with experts and shape the future of mobility."

Indian auto parts manufacturers are becoming favoured suppliers for Tesla Inc as the company seeks to reduce its reliance on China, according to sources familiar with the matter. Tesla is reportedly willing to pay a premium for these components. The electric car giant currently procures various India-made parts, ranging from small plastic components to complex differential systems and wheel hubs. Industry data from Mint indicates that, in the 2022-23 period, 30 component manufacturers, including Indian firms and multinational companies with operations in India, exported parts valued at $135-150 million to Tesla. However, this figure is expected to increase when considering additional sales by Tier-2 and Tier-3 suppliers. Key players in this supply chain include Sona Comstar, the largest Indian supplier for Tesla, along with Graziano Trasmissioni India (a DANA group company), Tata AutoComp Systems, CISWW Engineering India, and Bharat Forge. The details of these suppliers' business relationships with Tesla remain undisclosed due to non-disclosure agreements. In September, India's commerce and industry minister, Piyush Goyal, stated that Tesla had sourced nearly $1 billion worth of auto parts from India in 2022 and was on track to double this amount in the following year. Goyal's recent visit to Tesla's manufacturing facility in Fremont, California, coincided with discussions about a potential new national electric vehicle (EV) policy in India, which could include reduced import duties on EVs if foreign automakers like Tesla commit to local manufacturing. Tesla's move to diversify its supplier base away from China is driven by a desire to mitigate supply chain risks amid ongoing tensions between the U.S. and China. While China has lower raw material costs, Tesla views India as a quality alternative, even if it involves slightly higher prices. The company's outsourcing to India includes complex machine parts, reflecting a broader trend of sourcing from countries like India, Vietnam, and Mexico, especially for commodity parts. The Indian government is actively encouraging global EV manufacturers to invest in the country, positioning India as a hub for talent and manufacturing in green mobility solutions. Reports suggest that a new national EV policy may lead to lower import duties for EVs up to a specified price level, incentivising companies to engage in local manufacturing within the next few years. This aligns with Tesla's interest in targeting the mass-premium segment of passenger EVs in India.

Next Story
Infrastructure Urban

ABS Marine Sees CRISIL Credit Rating Upgrade

ABS Marine Services has secured an upgrade to its long term and short term credit ratings from CRISIL, reflecting improved profitability and revenue growth through long term contracts. CRISIL moved the long term rating from BBB+/Stable to A-/Stable and revised the short term rating from A2 to A2+. The action signals strengthened financial metrics and operational resilience. The company benefited from durable client relationships with firms such as ONGC and Schlumberger. The rating decision followed stronger cash flows and an enlarged bank loan facility, which increased from Rs 3,705 million (m..

Next Story
Infrastructure Transport

Project BRAHMANK Marks 16 Years Of Strategic Roads In Arunachal

Project BRAHMANK is marking 16 years of work to establish strategic road and bridge links across Arunachal Pradesh, maintaining and developing 811 kilometres of roads and nearly 86 bridges that range from small culverts to large steel and arch bridges. These transport links are described as critical for ensuring year-round movement of defence personnel, equipment and essential supplies while improving everyday travel for people in remote villages. The project balances national security requirements with regional development by focusing on reliable access in challenging terrain. Notable enginee..

Next Story
Infrastructure Transport

Longleng CSOs Give One Week Ultimatum Over Two-Lane Highway

Civil society organisations (CSOs) in Longleng district have demanded immediate restoration of the deteriorating Changtongya–Longleng two-lane road and sought a detailed status report on the stalled construction within one week. The demand followed a consultative meeting convened under the Phom Peoples' Council (PPC) to discuss welfare and development concerns. PPC president YB Angam Phom said prolonged non-maintenance had caused hardship to commuters and affected transportation, local commerce and the district's development. The meeting urged authorities to undertake immediate restoration a..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement