Tesla Mulling Bringing Its Auto Parts, Electronics Supply Chain To India

Electric car maker Tesla has reportedly held talks with the Indian government to explore the possibility of bringing its auto parts and electronics supply chain to India.

During the talks with the officials, the company also discussed the possibility of it being eligible to get incentives and tax benefits, ET reported.

The development comes less than a month after Tesla CEO Elon Musk met Prime Minister Narendra Modi during the latter’s state visit to the US. Before the PM visited the US, a delegation of Tesla executives landed in India in May to discuss the possibility of setting up shop in the country.

To be sure, if Tesla decides to set up a manufacturing base in India, it would likely be eligible for incentives under the FAME-II scheme and the production-linked incentive (PLI) schemes for automobile manufacturing and battery manufacturing.

During the latest meeting, the report citing government sources said, Tesla expressed interest in bringing its supply chain ecosystem to India. However, officials asked the company to evaluate the existing auto components supply chain in the country.

A senior government official told the publication that the Centre asked Tesla about its specific needs and urged it to consider sourcing from the Indian ecosystem. The official added that while companies with a global supply chain like Tesla and Apple have a ‘well-oiled’ system, the government remains hopeful of making some headway.

Incidentally, Tesla had said at a Society of Indian Automobile Manufacturers (SIAM) meeting that it would want to bring its suppliers to India. The US-headquartered electric car maker maintained its ‘all in-house’ stance and said it relies on a certain level of quality standards that can only be replicated with its established partners.

After years of standoffs over import duty, Musk, following his meeting with PM Modi, said Tesla will be in India ‘as soon as humanly possible’. The Indian government said it invited Musk to explore investment opportunities in electric mobility and the commercial space sector. The Tesla and SpaceX CEO said he was ‘trying to figure out the right timing’ to make that happen.

Musk also briefed Modi about the plans to set up a manufacturing base in India. Tesla is also looking at the readiness of the electronics ecosystem infrastructure.

India has strong potential for a sustainable energy future, including solar power, stationary battery packs and EVs, Musk said during the meeting, adding he hopes to bring SpaceX’s Starlink satellite internet service to India as well.

The Indian government has been trying to promote India as a global manufacturing hub for the last few years. As such, investment by Tesla in India would further strengthen its claim. 

Tesla’s manufacturing plans come as the likes of Apple and Google are already looking at India as a potential manufacturing hub. While the iPhone maker has already set up extensive manufacturing in India, with plans to further expand production, the search engine giant is considering bringing the production of its Pixel line of smartphones to India.