Tesla reportedly talking to Tata for EV component sourcing

Tesla is reportedly talking to local suppliers, including those from Tata, amid its supply chain diversification away from China and Taiwan. This move aligns with its goal to sell cars in India, where incentives are available for EV manufacturers that produce locally.

According to the Economic Times, citing sources familiar with the matter, Tata AutoComp, Tata Consultancy Services (TCS), Tata Technologies, and Tata Electronics are reportedly emerging as global suppliers for Tesla. Insiders have indicated that these Tata Group companies are preparing for an expanded role if Tesla decides to enter the Indian market. Discussions have revolved around the potential development and manufacturing of various components, including castings, forgings, electronics, and fabrication items.

According to the report, Tata AutoComp emerges as a potential supplier due to its specialization in EV engineering products. Meanwhile, Tata Technologies offers comprehensive product life cycle management solutions, and TCS provides advanced circuit-board technologies. It's possible that Tata Electronics supplies chips, which will be contingent on the operational launch of a local manufacturing plant.

An anonymous industry source remarked that Tesla is actively establishing a supplier base in India, suggesting that Indian suppliers are poised to gain from future sourcing opportunities once Tesla initiates local manufacturing.

The news comes as rumors indicating that Tesla aims to source an array of components, such as wiring harnesses, electric motors, gearboxes, forged parts, and high-value electronics, from suppliers located outside of China and Taiwan.

Furthermore, the rumor coincides with India's new tariff policies aimed at attracting foreign EV manufacturers and boosting the domestic market. The updated policy reduces the import duty for EVs priced above US$35,000 to 15%, contingent on manufacturers investing at least US$500 million in local production within three years. They must also achieve 25% domestic value addition in three years and 50% by the fifth year. Still, the policy limits imports at the reduced duty to 40,000 units over five years, with an annual cap of 8,000 units.

Tesla is now sourcing essential components from over a dozen Indian firms, including Samvardhana Motherson and Bharat Forge. The company is also in discussions with various Indian states—Rajasthan, Gujarat, Tamil Nadu, Maharashtra, and Telangana—about establishing a manufacturing base in India. This move aims to enhance Tesla's standing in the country while boosting opportunities for local suppliers.

Global investments

International electric vehicle (EV) manufacturers are increasing investments in India's growing EV market, driven by supportive government policies and rising demand for sustainable transportation.

In March, Skoda Auto, a subsidiary of the Volkswagen Group, said it plans to invest in EV manufacturing in India despite an ongoing US$1.4 billion tax dispute. Skoda CEO Klaus Zellmer reaffirmed the company's commitment to the Indian market, highlighting plans to utilize Volkswagen's EV technology to comply with India's 2027 fuel efficiency standards. The company also maintains a component supply agreement with Mahindra & Mahindra and is preparing for substantial investments in Maharashtra state.

Hyundai announced plans in 2024 to launch its first India-made EV in 2025, followed by at least two gasoline-powered models by 2026. The company aims to strengthen its position against growing competition from domestic automakers such as Tata Motors and Mahindra & Mahindra. Hyundai also plans to introduce four additional EV models by the end of the decade and is exploring the potential to establish India as a regional EV export hub.

Meanwhile, Chinese automaker BYD is seeking to manufacture EVs in India but awaits approval from New Delhi to ease investment regulations for Chinese companies. BYD submitted a US$1 billion investment proposal in 2023 to produce EVs with a local partner, but the Indian government has yet to grant clearance.

Source: Bloomberg, March 2025

Article edited by Jack Wu