When Tesla considered building a factory in India, officials asked the company to follow Apple’s example and find local companies to work with relevant Chinese suppliers, according to three government sources with direct knowledge of the matter.
Tesla has been in talks with India for weeks about setting up a factory that could produce $24,000 (roughly Rs. 20 lakh) cars for local sales and exports, but tensions between India and China may Tesla’s plans to bring in Chinese suppliers have become complicated.
Tesla founder Elon Musk is looking to expand beyond China, the company’s largest overseas base, and regulators have been slow to approve expansion.
But if Tesla is to build a factory in India and control the cost of cheap electric cars, Chinese suppliers could be crucial. India has no local suppliers of components such as batteries, and even Tata Motors, India’s largest electric car maker, imports them from China.
Three Indian officials with direct knowledge of the negotiations said that during meetings with officials in New Delhi, Tesla executives told the Indian government that it wanted some suppliers from China to set up local bases to strengthen its supply chain.
In response, officials told Tesla that approving wholly Chinese-owned enterprises in India may be difficult due to the strict scrutiny of Chinese companies since the border conflict between the two countries in 2020.
Instead, Indian officials said they came up with a solution in which Tesla would follow Apple’s lead. The US smartphone giant has received approval to bring Chinese suppliers to India in recent months after finding a local joint venture partner.
Spokespersons for Tesla, the Indian government and the trade ministry did not respond to requests for comment.
Apple has a fast-growing supply chain in India, including Taiwan’s Foxconn, which assembles iPhones.
New Delhi has been approving joint venture partnerships with Indian companies from some Chinese suppliers on a case-by-case basis in recent months, a government source said.
However, India remains hesitant to allow Chinese companies, especially automakers, to expand in the country.
Last month, China’s BYD told its Indian partners that it would shelve a new $1 billion (roughly Rs. 8,233 crore) investment plan to make electric vehicles in India after its investment proposal faced scrutiny in New Delhi.
A fourth source with direct knowledge of Tesla’s discussions in India said the U.S. company was looking for supply chain partners for its Indian factory but did not specify Chinese suppliers.
An Indian official said pairing local and Chinese companies could benefit Tesla.
“Tesla has been asking for a separate ecosystem for its (Chinese) suppliers… If there is an Indian joint venture partner, these approvals can be granted on a case-by-case basis,” the official said.
© Thomson Reuters 2023
Svlook
