India (Common Wealth) _ According to three government sources with firsthand knowledge of the situation, as Tesla considers building a plant in India, officials have requested the business to follow Apple’s lead in partnering with any Chinese suppliers involved.
Tesla has been in negotiations with India for weeks about establishing a factory that might produce a $24,000 car for local sales and exports, but tense India-China relations threaten to hinder Tesla’s ambitions to bring in Chinese suppliers.
Elon Musk, the founder of Tesla, is looking to expand outside the company’s largest international market, China, where governmental licenses for development are sluggish to arrive. However, Chinese suppliers may be important if Tesla were to develop a facility in India while keeping costs down for a low-cost EV. Even India’s largest EV manufacturer, Tata Motors, imports battery cells from China since there are no local sources.
According to three Indian officials with firsthand knowledge of the talks, Tesla executives advised the Indian government in meetings in New Delhi that it would like to have some of its Chinese vendors establish up shop locally to strengthen its supply chain.
In response, officials informed Tesla that providing permissions for wholly-owned Chinese companies in India could be problematic due to intensified inspection of Chinese firms after the two countries’ 2020 border dispute. Instead, Indian officials stated that they had proposed a solution in which Tesla would mimic Apple’s (AAPL.O) approach. In recent months, the US smartphone giant has received authorization to import Chinese suppliers to India after locating local joint venture partners.
Tesla, the Indian government’s spokeswoman, and the commerce ministry did not reply to calls for comment. Apple has a rapidly expanding supplier network in India, which includes Foxconn of Taiwan, which assembles iPhones.
According to government sources, New Delhi has been accepting some Chinese suppliers’ JV arrangements with Indian companies on a case-by-case basis in recent months. However, India remains reticent to allow Chinese industries, particularly automakers, to develop in the nation.
After its investment proposal was scrutinized by New Delhi, China’s BYD (002594.SZ) informed its Indian partner that it would cancel a new $1 billion investment plan to construct EVs there. A fourth person with direct knowledge of Tesla’s conversations in India claimed the company is looking for supply chain partners for its India manufacturing, without naming any Chinese vendors.
According to one of the Indian executives, combining local and Chinese players could benefit Tesla. “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,” according to the official.
