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.

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 Energy

South West Pinnacle Wins Rs 30 Cr Oman Mining Contract

South West Pinnacle Exploration Ltd has secured a Rs 30 crore contract from Minerals Development Oman (MDO) for mining exploration in concession areas 12B and 13.The two-year project will be carried out via Alara Resources LLC, a JV in Oman. MDO, backed by Oman’s investment authorities, focuses on monetising mineral wealth.The contract covers copper, gold, and chromite and highlights South West Pinnacle’s growing footprint in international exploration and mining services. ..

Next Story
Equipment

Godrej GEG Boosts Intralogistics with AI and Green Tech

Godrej Enterprises Group (GEG) is revolutionising warehouse and factory logistics through its Material Handling Equipment and Storage Solutions arms by integrating AI, IoT, and automation.With 20–25% market share and 85% local sourcing, GEG champions Atmanirbhar Bharat and sustainability. The Chennai plant, a green manufacturing leader, uses RoHS-compliant materials and has slashed energy consumption by 60%.GEG serves e-commerce, FMCG, retail, and cold chains with high-performance racking and electric forklifts. Upcoming IoT-enabled forklifts and telematics solutions aim to improve speed, sa..

Next Story
Infrastructure Urban

Amit Shah Inaugurates Key Projects Across Gujarat

Union Home Minister Amit Shah inaugurated and laid the foundation stone for various projects in Gujarat’s Panchmahal district and Ahmedabad.In Godhra, he inaugurated the Center of Excellence building, sports complex, reservoir, and Miyawaki plantation. In Ahmedabad, he unveiled a new cooperative complex in Adaroda village and a primary school in Juwal.These projects, under the Model Co-op Village scheme, aim to boost education, sustainability, and rural development across the state. ..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?