States like Gujarat and Tamil Nadu invite Tesla's component suppliers to eventually lure Tesla: Report
Indian states like Gujarat and Tamil Nadu try to lure Tesla by inviting their component suppliers as Tesla usually manufactures in close proximity to suppliers.
While the central government tries to woo Tesla for manufacturing in India, state governments like Gujarat and Tamil Nadu are trying to bring in Tesla’s component suppliers to produce parts in the respective states, the Economic Times reported, citing unnamed sources. HT couldn’t independently verify the information.
Why are states trying to lure Tesla's component suppliers?
This is because Tesla may be more likely to manufacture where its supplier ecosystem is, to accelerate production and save time and costs spent on transportation, the report read.
Three component suppliers of Tesla as well as other automakers were in Gujarat for site visits recently and two European suppliers are looking to expand operations in Tamil Nadu, according to the report.
Tamil Nadu, which has already become an automotive and electronics manufacturing hub, does have some of Tesla’s suppliers based there, including one of the aforementioned European suppliers who produce metal components and a German manufacturer of rubber parts with a joint venture in Pune.
Since Tata Motors and Vinfast are setting up massive plants in Tamil Nadu, its likely that these suppliers will look to serve Jaguar-Land Rover and Vinfast as well.
Where does Tesla get components from?
Tesla has partnerships with China’s BYD and CATL for batteries and with Panasonic and LG Energy in the USA for the same, the report quoted Soumen Mandal, Senior Research Analyst at Counterpoint Research as saying.
Similar strategic supply chain partnerships exist globally for components like telematics, power cables, LED lights, and displays, he added.
How will states luring Tesla's component makers impact India?
This is advantageous to India as the reduction of US manufacturers’ dependency on China has made India a reliable partner to meet growing demands, the report quoted Ashwin Amberkar, automotive analyst at Canalys as saying.
What is India's current EV policy?
Global automakers will be allowed to import Completely Built Up (CBU) vehicles at a reduced import duty of 15% for vehicles priced $35,000 and above for a period of five years.
However, this is provided they set up a factory to manufacture domestically within three years and achieve 25% localisation of components by the third year and 50% by the fifth year.