May 24, 2017

Tesla in talks with global component makers for manufacturing in India

BYSunny Sen

Electric carmaker Tesla Motors is in talks with component makers Germany’s Dräxlmaier Group and Italy’s Magneti Marelli to source electric parts for its India venture, a person with knowledge of the negotiations told FactorDaily.
Discussions are at an advanced stage as part of a global contract, which will allow the parts makers to supply to Tesla in India, according to the person.
“If any global component maker doesn’t make those electric parts in India, it can buy it from the parent company and source it for Tesla,” said the person, who works with an auto consulting firm. He added that he expected a robust ecosystem to evolve in India for electric cars.

“If any global component maker doesn’t make those electric parts in India, it can buy it from the parent company and source it for Tesla” — a person who works with an auto consulting firm  

This indicates that Tesla is at work on its India entry plans despite indications that a launch here planned for this summer may be delayed.
Also read: Tesla may not be coming to India this year
Emails sent to Tesla, Dräxlmaier and Magneti Marelli on Monday requesting comment for this story have not been replied to. We will update the story when and if we hear from them.
On Monday morning, Elon Musk, Tesla’s CEO, had tweeted citing a regulation that the company’s plans to sell its cars in India by summer might be doubtful.

He was responding to a tweet by Twitter user @TheAvinash Singh who had asked, “Are there any chances for Tesla to release in India in 2017, or 2018?”
As it turns out, Musk got the Indian rules on local sourcing for carmakers wrong. There is no rule on foreign direct investment in automobile manufacturing that asks for a 30% local sourcing. That rule, the Make in India initiative of the government of India said in a tweet Tuesday, applies only to retail trading.

India, which is betting big on electric mobility, is a significant market for Tesla in the years ahead. Not only is the country already the world’s fourth largest car market by volumes (tipped to overtake Japan by 2020), it also wants to become an all-electric car nation by 2030. “The idea is that by 2030, not a single petrol or diesel car should be sold in the country,” Piyush Goyal, minister of state with independent charge for power, coal, new and renewable energy, and mines, said in early May.
Also read: Electric cars are ready to take over the world — and India
“It is not necessary for carmakers to source locally. However, importing fully built units makes the cars expensive as it attracts 100% to 120% (import) duty,” said Sudarshan Shreenivas, director, corporates, at India Ratings and Research, explaining the options for India before Tesla.
Elsewhere, like in the US, Tesla owns the entire car making value chain: from manufacturing to distribution to retail and could be looking at a similar structure in India.
Also read: This maker team from Bhopal is custom-building an autonomous vehicle technology for India
Lead image: Nikhil Raj

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Sunny Sen is a writer of FactorDaily.