Tesla is considering the possibility of building a manufacturing plant in India, and the Indian officials have asked the company to follow Apple’s example in collaborating with Indian companies if it intends to work with Chinese suppliers.
Elon Musk, the CEO of Tesla, has been in discussions with the Indian government to establish a facility for manufacturing affordable electric vehicles (EVs) for the Indian market and for exports. Tesla aims to expand its operations beyond China, where the regulatory approvals for expansion are slow.
However, the tense relations between China and India may pose a challenge to Tesla’s plans to work with Chinese suppliers. Chinese suppliers are vital for Tesla’s operations in India, as they can help control prices and enable the production of low-cost EVs. Even Tata Motors, India’s largest EV manufacturer, imports battery cells from China due to limited local production of such components.
Tesla executives have expressed their interest in having some of their Chinese vendors establish local bases in India to strengthen their supply chain. However, Indian officials have raised concerns about approving wholly-owned Chinese corporations in India, given the scrutiny Chinese companies have faced after a border dispute between China and India in 2020.
In light of this situation, Indian officials have suggested that Tesla adopt Apple’s strategy. Apple, the world’s largest smartphone manufacturer, recently received permits to bring Chinese suppliers to India by partnering with local joint-venture (JV) partners. Apple has a rapidly expanding supply chain and assembles iPhones in India through a partnership with Taiwan’s tech giant, Foxconn.
While New Delhi has approved certain JV arrangements between Chinese suppliers and Indian businesses on a case-by-case basis, it remains cautious about allowing Chinese businesses, especially those in the automobile sector, to operate freely in the country.
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