Tesla plans to nearly double its Indian component sourcing to 1.9 billion dollars this year according to a government minister

Double Sourcing from India to Reach $1.9 Billion This Year

The Indian government has announced that Tesla is planning to nearly double its component sourcing from the country to up to $1.9 billion this year, marking a significant growth in electric-vehicle (EV) component manufacturing in India.

According to India’s trade minister Piyush Goyal, Tesla bought $1 billion of automobile components from India in 2022 and is targeting to take it to $1.7-$1.9 billion this year. This development underscores the country’s growing importance as a supplier for EV manufacturers worldwide.

India’s Growing Auto Component Industry

The auto component industry in India has been gaining momentum, with the government aiming to make the country a major player in the global market. The Indian government wants to expand its EV sales to 30% of all four-wheeled vehicles sold by 2030, which is an ambitious target given that EVs currently account for only around 2% of all four-wheeled vehicles sold between January-July this year.

The growth in the auto component industry has been driven by various factors, including the increasing demand for electric vehicles and the government’s push to encourage the adoption of cleaner technologies. As a result, companies such as Tata Motors, BYD, and MG Motor (owned by SAIC) are leading the charge in EV sales in India.

Tesla’s Plans: A Long-Running Discussion

However, despite the growing importance of India as a supplier for EV manufacturers, Tesla’s long-floated promise to build its own plants in the country remains an "electric dream." The company has been discussing plans to bring its manufacturing operations to India since 2021, which has played into India’s ambition to be a producer and major customer for the electric vehicle market.

In June this year, Tesla CEO Elon Musk met with Indian Prime Minister Narendra Modi in the U.S., following which Musk said that Tesla was looking to invest in India and establish its local presence in the Indian market "as soon as humanly possible." However, he did not provide any timeline or investment plan for the company’s operations in India.

A Long-Running Relationship

The ongoing discussions between Tesla and New Delhi to bring the carmaker to India have been taking place for several years. Some of that promise has been used as a stick rather than a carrot by the company, with Musk using it to pressure the government into granting approvals for the sale and service of imported vehicles in India.

Last year, Musk said that manufacturing its vehicles locally in India would not come before the company was given a green light to sell and service imported vehicles there. However, despite these assurances, Tesla has yet to make any concrete plans or investments in India.

India’s Ambition: A Major Player in EV Manufacturing

The Indian government wants to expand the country’s role as a supplier for EV manufacturers worldwide. The government’s vision is to create a hub for electric vehicle component manufacturing and exports from India, with the aim of reducing its dependence on imports and increasing its contribution to the global market.

To achieve this goal, the government has been implementing policies aimed at encouraging the adoption of cleaner technologies and promoting the growth of the auto component industry. The growth in EV sales is also expected to drive demand for electric vehicle components, providing a boost to the country’s manufacturing sector.

Tesla’s Role: A Catalyst for Growth

Despite its ongoing discussions with the Indian government, Tesla’s long-floated promise to build its own plants in India remains an "electric dream." However, the company’s plans to nearly double its component sourcing from India to $1.9 billion this year are a significant step towards realizing its ambition.

Tesla’s growing presence in India is expected to drive growth in the country’s auto component industry and promote the adoption of cleaner technologies. As a major player in the global EV market, Tesla’s involvement in India is likely to have a positive impact on the country’s economy and environment.

Conclusion

The Indian government’s push to encourage the adoption of electric vehicles has been gaining momentum, with the country aiming to expand its EV sales to 30% of all four-wheeled vehicles sold by 2030. Tesla’s plans to nearly double its component sourcing from India to $1.9 billion this year are a significant step towards realizing its ambition and promoting the growth of the auto component industry in the country.

While the company’s long-floated promise to build its own plants in India remains an "electric dream," its growing presence in the country is likely to have a positive impact on the economy and environment. As a major player in the global EV market, Tesla’s involvement in India is expected to drive growth in the country’s auto component industry and promote the adoption of cleaner technologies.

Recommendations

• The Indian government should continue to implement policies aimed at encouraging the adoption of electric vehicles and promoting the growth of the auto component industry.
• Tesla should consider investing in India to realize its ambition of building its own plants in the country.
• The company’s growing presence in India is likely to drive growth in the country’s auto component industry and promote the adoption of cleaner technologies.