Tesla’s anticipated launch in India was postponed earlier this year. Despite this, numerous state governments remain ambitious. As per an Economic Times report, many suppliers of Tesla Inc are searching for appropriate places in India to start or expand their operations. However, Tesla’s intentions for local manufacturing are still unclear.

The central government is making efforts to attract Tesla. The source reported that Gujarat and Tamil Nadu are broadening their approach to lure Tesla’s suppliers. Both the state governments believe Tesla will set up operations where its supply chain is strong.

Tesla Suppliers Explore Gujarat and Tamil Nadu

According to the report, sources mentioned that three of Tesla’s suppliers recently visited Gujarat to explore possible locations. These suppliers produce various components and serve other car manufacturers, showing significant interest in Gujarat.

Furthermore, two European suppliers are thinking about growing their activities in Tamil Nadu. The southern state is popular for its presence in automotive and electronics manufacturing and already accommodates a few suppliers of Tesla.

One is a European company that makes metal automotive parts and plans to expand. Another is a German company with a joint venture in Pune, manufacturing high-performance rubber parts. According to insiders, both firms will operate in Tamil Nadu under their parent company’s name.

Impact of Local Sourcing on Tesla

Tamil Nadu is focusing on leveraging its robust electronics manufacturing sector to attract Tesla and other electric vehicle makers. According to the report, Gujarat is also actively trying to lure Tesla’s suppliers.

Tesla has an intricate supply chain involving partnerships with numerous Tier-I and Tier-II suppliers globally, ensuring timely delivery of high-quality products. Moreover, these suppliers serve multiple companies, not just Tesla.

According to industry experts, Tesla favors using local suppliers to accelerate production and lower the costs of transporting components.

Tesla’s Potential Entry into Indian Market

Tesla’s sales and production figures are closely linked, meaning any supply chain problems could affect sales right away. Therefore, the supply system needs to be ready before Tesla begins production.

According to Ashwin Amberkar, an automotive analyst at Canalys, India can benefit big time as global manufacturers move their operations away from China. Also, he said that US manufacturers’ reduced reliance on China has made India a dependable partner to fulfill increasing needs.

According to him, if Tesla enters the Indian market, it will leverage its global partners in India to cut production costs, handle supply chain risks, and comply with local sourcing regulations.