India Urges Tesla to Follow Apple’s Lead in Connecting Chinese and Indian Suppliers
Three government sources with direct knowledge of the matter have revealed that as Tesla considers establishing a manufacturing facility in India, authorities have requested the company to follow Apple’s example by collaborating with local companies in case they engage with Chinese suppliers.
Tesla has been in talks with India for weeks to set up a factory to potentially build the $24,000 car for local sale and export, but strained relations between India and China threaten to complicate Tesla’s plans to bring in Chinese suppliers.
Tesla founder Elon Musk aims to expand beyond the company’s largest foreign base in China, where official approvals for expansion are slow.
But Chinese suppliers could be critical if Tesla is to set up a factory in India and keep costs down for a cheap electric car. India has no local suppliers for components such as battery cells, and even Tata Motors, India’s largest electric car maker, imports them from China.
In meetings with officials in New Delhi, Tesla executives told the Indian government that it would like some Chinese vendors to set up a base locally to boost its supply chain, said three Indian officials with direct knowledge of the talks.
In response, officials told Tesla that granting approvals to wholly-owned Chinese companies in India could be difficult due to intense scrutiny of Chinese companies after the 2020 border clash.
Instead, Indian officials said they proposed a workaround in which Tesla would emulate Apple’s approach. In recent months, the US smartphone giant has received approvals to bring Chinese suppliers to India after finding local joint ventures.
A spokesman for India’s government and commerce ministry for Tesla did not respond to requests for comment.
Apple has a fast-growing supply chain in India that includes Taiwan’s Foxconn, which assembles its iPhones.
In recent months, New Delhi has approved some Chinese suppliers’ JV partnerships with Indian companies on a case-by-case basis, one of the government sources said.
However, India is hesitant to allow Chinese companies, especially car manufacturers, to expand into the country.
Last month, China’s BYD told its Indian partner it was scrapping a new $1 billion investment plan to build electric cars, after which its investment proposal came under scrutiny from New Delhi.
Without specifying the Chinese vendors, a fourth source with direct knowledge of Tesla’s discussions in India said the US company is looking for supply chain partners for its Indian factory.
One of the Indian officials said that combining local and Chinese players could work for Tesla.
“Tesla has required a separate ecosystem for its (Chinese) supplier base… these approvals may be granted on a case-by-case basis if there is an Indian joint venture partner,” the official said.
