India seeks Tesla to emulate Apple by collaborating with Chinese and Indian suppliers -sources
India seeks Tesla to emulate Apple by collaborating with Chinese and Indian suppliers -sources
Tesla Looking to Emulate Apple’s Strategy in India
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Tesla’s expansion plans in India face a potential setback due to strained India-China ties. As Tesla examines the possibility of building a factory in India, officials have urged the company to follow Apple’s footsteps by partnering with local firms to offset any involvement of Chinese suppliers. Elon Musk, the founder of Tesla, is keen on expanding beyond China, where regulatory approvals for expansion are slow. However, to keep costs manageable for a cheap electric vehicle (EV), Chinese suppliers could be critical for Tesla if it establishes a plant in India.
India, lacking local suppliers for EV components like battery cells, relies heavily on imports from China, even the country’s largest EV maker, Tata Motors. In Tesla’s discussions with Indian officials in New Delhi, the company expressed its desire to have Chinese vendors set up bases locally to enhance the supply chain. Responding to this, Indian officials conveyed that granting approvals for wholly-owned Chinese companies could be challenging due to increased scrutiny following the 2020 border clash between the two countries.
However, Indian officials proposed a workaround inspired by Apple’s approach. Apple, in recent months, obtained approvals to bring Chinese suppliers to India by partnering with local joint-venture firms. Tesla, the Indian government’s spokesperson, and the trade ministry declined to comment on these discussions.
Apple has successfully developed a fast-growing supply chain in India, with Taiwan’s Foxconn assembling its iPhones. Meanwhile, New Delhi has been selectively approving some Chinese suppliers’ joint ventures with Indian companies, focusing on a case-by-case basis. However, the Indian government remains cautious about allowing Chinese companies, especially automakers, to expand in the country. Just last month, China’s BYD informed its Indian partner that it would delay a planned $1 billion investment in EV production in India due to scrutiny from New Delhi.
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Although the specific Chinese vendors were not disclosed, a source familiar with Tesla’s discussions in India revealed that the company is exploring potential supply chain partnerships for its factory in the country. According to one Indian official, bringing together local and Chinese players could be a viable option for Tesla. The official stated, “Tesla has been demanding a separate ecosystem for their (Chinese) vendor base…those approvals can be granted on a case-by-case basis if there is an Indian joint venture partner.”
Overall, Tesla’s plans to establish a factory in India are met with challenges due to the relationship between India and China. However, by emulating Apple’s successful strategy of partnering with local firms to facilitate Chinese supplier involvement, Tesla could navigate the complex landscape and strengthen its supply chain in India. As India cautiously evaluates Chinese companies’ expansion in the country, the approach of pairing local and Chinese players could provide a favorable solution for Tesla in its pursuit of growth in the Indian market.
