Tesla Partners With Tata Group Companies To Strengthen EV Supply Chain In India: Report

The Tata companies continue to fulfilling their global sourcing agreements with Tesla, as they contributed to the $2 billion worth of Indian supplies to the automaker in the FY24, the report said.

However, Tesla’s decision to establish local manufacturing or opt for contract production in India would determine the next course of action for its suppliers.

Source : Archello

Several Tata Group firms, including Tata AutoComp, Tata Consultancy Services, Tata Technologies, and Tata Electronics, have become global suppliers to Tesla. The American EV giant, which represents nearly half of the global automotive market’s value, reportedly engaged with these companies as it explores potential expansion in India, media reports said.

Citing an anonymous top industry source, The Economic Times reported, "Tesla is, in a way, readying the supplier base in India. We are very sure that once Tesla starts manufacturing here, Indian suppliers will benefit from sourcing opportunities.”

The report noted that the automaker's senior global procurement executives met with many of its existing suppliers to discuss further collaborations. These discussions focused on the development and manufacturing of crucial automotive components, including castings, forgings, electronics, and fabrication materials.

To strengthen its ecosystem, Tesla has initiated discussions about setting up production closer to its manufacturing hubs.

Currently, the Tata companies mentioned above continue to fulfilling their global sourcing agreements with Tesla, as they contributed to the $2 billion worth of Indian supplies to the automaker in the 2023-24 fiscal year, the report said.

However, Tesla’s decision to establish local manufacturing or opt for contract production in India would determine the next course of action for its suppliers.

Local Expansion and Strategic Sourcing

Tesla is actively monitoring potential incentives and duty exemptions as part of its India expansion plans. However, no official comment has been given by either of the companies involved in the matter.

Citing sources, the report further said that Tesla also maintains a strict confidentiality clauses in its supplier agreements to keep sourcing details undisclosed.

The report added that India has a critical role in Tesla’s supply and development strategy. The company is expected to procure various components, such as wiring harnesses, electric motors, gearboxes, castings, sheet metal, high-value electronics, and suspension systems, from suppliers outside China and Taiwan.

Among Tata companies, Tata AutoComp contributed engineering products for EVs, Tata Technologies provided product life cycle management, TCS specialised in circuit-board technologies, and Tata Electronics prepared to supply semiconductor chips once a local plant becomes operational.

Tesla may also source printed circuit board assemblies from Tata Electronics for its battery management systems, motor controllers, and door control mechanisms.

India’s Expanding Role in Tesla’s Supply Chain

The total value of Tesla’s component sourced from India ranged between $1.7 and $1.9 billion in FY24, with expectations of further growth in FY25.

Following supply chain disruptions during the Covid-19 pandemic, Tesla looked for alternatives to China for its critical electronic, mechanical, and electrical components. 

The automaker, known for its stringent supplier confidentiality policies, produces critical electric components such as battery packs, motors, and chargers in-house while relying on external suppliers for subassemblies and additional parts.

Tesla reportedly instructed suppliers of models sold outside China to shift production of components and parts out of China and Taiwan by next year.

As part of its broader strategy, Tesla is engaging with multiple Indian states, including Rajasthan, Gujarat, Tamil Nadu, Maharashtra, and Telangana, to explore potential manufacturing sites, the report said.

Establishing an Indian facility could solidify Tesla’s presence in the country and open new opportunities for domestic suppliers.