Indian states are inviting Tesla's component suppliers to lure the EV maker

States like Gujarat and Tamil Nadu are competing to attract Tesla's component suppliers, hoping that a robust local supply chain will convince the EV maker to establish operations in their regions

After Tesla’s much-awaited entry into India got delayed indefinitely earlier this year, the ambitions of the state governments are yet to relent. According to an Economic Times report, several component suppliers of Tesla Inc are exploring suitable locations to either begin or expand their operations in India, despite the American car manufacturer’s uncertain plans for local production. 

While the efforts by the central government continue to attract US automaker Tesla, state governments like Gujarat and Tamil Nadu are taking a ‘wider net’ approach by trying to woo Tesla’s suppliers, believing that ‘Tesla is likely to establish operations where its supply chain is robust’, the business-daily reported.

 

Tesla component suppliers looking for manufacturing sites in India

Citing sources, the report mentioned three of Tesla’s suppliers recently visited Gujarat to look for potential sites. “These suppliers provide various components and also cater to other automotive companies, showing a keen interest in Gujarat,” it said.

Additionally, two European suppliers are considering expanding their operations in Tamil Nadu. Known for its automotive and electronics manufacturing prowess, the southern state already hosts some of Tesla’s suppliers. Among them are a European metal automotive component manufacturer planning to enlarge its current operations and a German manufacturer with a joint venture in Pune, producing high-performance rubber parts. “In Tamil Nadu, they will operate under their parent company name,” the business daily claimed, quoting insiders.

The German firm is a prominent supplier of anti-vibration engineering applications for all types of vehicles, including commercial ones.

How are states going about attracting Tesla?

While Tamil Nadu aims to attract Tesla and other electric vehicle manufacturers by capitalising on its strong electronics manufacturing ecosystem, Gujarat is also trying to aggressively woo Tesla’s suppliers, the report highlighted.

Tesla’s supply chain is complex, with partnerships with multiple Tier-I and Tier-II suppliers worldwide, ensuring the on-time delivery of quality products. And these suppliers do not exclusively serve Tesla, instead provide components to various other companies.

Meanwhile, Tesla prefers a local supply system to speed up production and reduce costs associated with transporting components, the news report said citing industry experts.

India: Tesla’s strategic supply hub

“Given the close link between Tesla’s sales and production numbers, any supply chain issues can immediately impact sales. Therefore, if Tesla starts production, the supply system must be ready beforehand,” the report cited an expert as saying.

India is benefiting from global manufacturers shifting away from China. Ashwin Amberkar, an automotive analyst at Canalys, told the business daily that the decreasing dependency of US manufacturers on China has positioned India as a reliable partner to meet growing demands.

He mentioned that if Tesla enters the Indian market, it will utilise its global supply chain partners based in India to its advantage, helping to lower production costs, manage supply chain risks, and adhere to local sourcing regulations.