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Tesla to source USD 1.9 billion worth auto parts from India

September 15, 2023

Tesla factory

American EV giant Tesla is planning to source USD 1.9 billion (approximately Rs 15,700 crore) worth of auto components as part of its global sourcing plan, said Union Minister for Commerce & Industry Piyush Goyal. This is nearly double the USD 1 billion sourcing that the US EV specialist had earlier procured from India.

There is an increased interest by Tesla to leverage India as a base not only for sourcing but use it as a manufacturing base for exports post Prime Minister Narendra Modi’s visit to the USA in June.

As per a news report in Reuters in August, the Government of India was exploring the possibility of reducing the import duty on EVs following the proposal by Tesla to locally manufacture in India. Speaking on this possibility at the 63rd annual session of ACMA, Goyal said, “This is a listening government. There are many opportunities around the world and we are making every effort to attract newer investment. Given the shift in the economic story, going forward, there will be a natural and increasing demand which will create a compulsive case towards sustainability.”

The policy being considered may allow automakers to import fully-built EVs at a lower rate of 15 percent versus 100 percent at present for cars priced over USD 40,000 and 70 percent for the rest, Reuters reported in August citing government officials. Many considered that this may impact the local manufacturers. However, Goyal assured stakeholders, saying, “The government will come out with a policy that will have stakeholder consultations with all industry bodies,” in order to ensure impartiality. 

‘India to become a world leader in EVs’: Piyush Goyal

The minister said that the delta between ICE and electric vehicles is further expected to get squeezed as EVs become a “compulsive investment space.” “India will become the unparalleled world leader in electric vehicles,” asserted Goyal.

He highlighted that India of today stands “on its own feet” which will attract investment, a good trade environment, a large market, good managerial talent and a young demographic with an average age of 30. “We will see the electric auto industry growing worldwide, we will see the [EV] footprint growing in India too. It will be a compulsive business case for consumers to go for electric vehicles by 2030, it won’t be driven by regulation or subsidy. Eventually, the compulsive economic proposition will be too good of an offer.”

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