Elon Musk’s Tesla to set up vendor base in India, initially focus on domestic vehicle assembly: Report

Tesla has reportedly shown interest in the proposal put forth by the Indian government to not only assemble its cars domestically but also establish a vendor base in the country. The government has suggested that the renowned electric vehicle manufacturer led by Elon Musk will initially focus on domestic vehicle assembly and subsequently proceed with the establishment of a vendor base, according to a report by the Financial Express.

Tesla is inclined towards swiftly setting up the domestic vendor base, as the company believes in the integration of manufacturing and supply chain processes, sources revealed to the publication.

Currently, a significant portion of Tesla's global production takes place in Shanghai, China, where the company has established a robust vendor base and recently constructed a megapack battery factory.

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If Tesla proceeds with establishing a manufacturing base in India, it would necessitate the relocation of these vendors to the country. In order to comply with India's post-2020 border clashes regulations, which discourage 100% Chinese investments, the vendors would be required to form joint ventures with Indian firms, the publication added. LiveMint could not independently verify the report.

Teslais actively considering establishing a manufacturing presence in India, Rajeev Chandrasekhar, India's deputy minister for technology, earlier told Reuters. A meeting with senior executives from Tesla encompassed a wide range of topics, including incentives for car and battery manufacturing, as Tesla explores opportunities to enter the Indian market.

Chandrasekhar said that Tesla was taking India “seriously” as a potential hub for production and innovation. The Indian government has conveyed its commitment to collaborating with Tesla to ensure the success of any investment or ambitious plans the company may have in India, Reuters added.

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Tesla has proposed the establishment of a factory in India dedicated to manufacturing electric vehicles (EVs), as per Reuters. Additionally, the company is exploring the possibility of manufacturing EV batteries in the country.

When queried about the nature of the talks, Chandrasekhar said that the discussions extended beyond just vehicle manufacturing. In such conversations, topics such as energy, manufacturing technology, and the overall vision for Tesla's operations in India are thoroughly deliberated.

(With Reuters inputs)