Tesla battery supplier Panasonic in talks to set up plant in India

The carmaker has asked its other battery suppliers also to initiate talks for hubs

In a strategic move aimed at solidifying its supply chains before entering the Indian market, Texas-headquartered electric-vehicle (EV) manufacturer Tesla has asked its battery suppliers to initiate negotiations with the government to set up battery-manufacturing units in the country, Business Standard has learnt.

The move comes after Tesla’s chief executive officer (CEO), Elon Musk, announced his plans of entering the Indian market.

Panasonic Energy, one of Tesla’s top battery suppliers, has approached the Indian government on setting up a battery-manufacturing unit.

A Panasonic Energy delegation headed by Kazuo Tadanobu, president and CEO of Panasonic Energy, met Ministry of Heavy Industries officials earlier this month to discuss the possibilities of building a battery supply chain in the country, senior government officials said.
 

“Tesla’s electronics supply-chain players have started scouting the Indian market. They are understanding the structure of incentives Tesla and its partners are likely to receive if they are to bring their manufacturing unit to India,” said a top official, who did not wish to be identified.

The turnaround in Tesla’s plans to invest in India comes within weeks of Musk’s meeting with Prime Minister Narendra Modi during the latter’s state visit to the United States (US) last month.

Musk had then said: “I am confident that Tesla will be in India and will do so as soon as humanly possible.”

According to government officials, the Prime Minister’s Office (PMO) and the commerce and industry ministry are leading the talks and the government is hopeful that the US automaker will set up its local manufacturing and supplier chain.

If the proposal goes through, it will be a big boost for the government’s “Make in India” pitch. Panasonic has also expressed its interest in participating in the 20GWh slot bidding, which fell vacant after one of the initial candidates that qualified, Hyundai Global Motors, exited the Rs 18,100 crore production-linked incentive scheme for advanced chemistry cell battery storage.

Queries sent to Panasonic Energy did not elicit a response till press time.

Centre not considering tax waivers for Tesla
 

The finance ministry is not considering any duty waivers for U.S. automaker Tesla Inc , Revenue Secretary Sanjay Malhotra told Reuters on Thursday.
 

In the past, talks between the US carmaker and the Indian government have involved seeking customs duty waivers for importing its electric vehicles, which was rejected by India.

“Any duty waiver for Tesla is not under active consideration of the Department of Revenue, as of now,” Malhotra said on Thursday.

Tesla has its battery cell manufacturing facility, called the “Gigafactory,” in Nevada, US. This is a joint venture between Tesla and Panasonic and is dedicated primarily to the production of battery cells and energy storage products for Tesla’s EVs and other applications.
 

According to their partnership agreement, Tesla has agreed to buy as much as Panasonic can make.

Panasonic supplies a significant portion of battery cells for Tesla’s vehicles, including those for the Model S, Model 3, and Model X.

Apart from Panasonic, the world’s largest battery manufacturer, Contemporary Amperex Technology Ltd, is Tesla’s battery supplier for the Chinese market.

The presence of Tesla’s battery-manufacturing units in the country will not only cater to the demand generated by the company’s vehicles but will also serve as a vital supplier to other domestic and international EV manufacturers.

Apart from supplying batteries to Tesla, Panasonic Energy manufactures batteries for Toyota, Mazda, and Lucid, among others. Musk has planned to sell 20 million EVs in 2030. Tesla’s spending outlook for the next two years is $7-9 billion.

So far, Tesla has sold more than four million vehicles across the world. The company has proposed to take its capacity to 40,000 per week and produce more than two million vehicles a year.

The entry of Panasonic into India would be a significant milestone because Tesla’s production depends on a continued supply of lithium-ion battery cells. According to Panasonic’s proposed plans, the company wants to boost its auto battery capacity to 200 gigawatt hours per year by March 2031, about four times its level at the end of this March.

Panasonic has over 10 billion cylindrical lithium-ion battery cells to date, which is equivalent to 1.7 million EVs since the mass production of the 1865 and 2170 cells started in FY09 and FY18, respectively. The company is also working on its newly developed 4680 cells.

“We have to date fully qualified only a very limited number of such suppliers and have limited flexibility in changing suppliers. Any disruption in the supply of battery cells from our suppliers could limit the production of our vehicles and energy storage products,” Tesla’s annual statement highlights.

EXPANDING REACH

Tesla’s electronics supply chain players have started scouting the Indian market

The government is hopeful that the automaker will set up its local manufacturing and supplier chain unit

Tesla has agreed to buy Panasonic’s full output from their production equipment at negotiated prices

Tesla's battery manufacturing units in the country will serve as vital suppliers to other domestic and international EV manufacturers

Musk plans to sell 20 million electric vehicles in 2030

Panasonic wants to boost its auto battery capacity to 200 gigawatt hours per year by March 2031, about four times its level at the end of this March