Tata-Tesla Partnership Commences: Supplies To Begin Soon!
Another day, another piece of news around Tesla Inc. It looks like several Tata Group companies have signed up as preferred global suppliers for Elon Musk's EV company. This is a huge deal for Tata Group as it represents nearly half of the global automotive industry's market value. Tata AutoComp, Tata Consultancy Services, Tata Technologies, and Tata Electronics are the companies involved. Supplies are known to begin soon. They are positioning themselves in a way that they'd also be able to support when Tesla decides to start operations in India.
Tata Companies As Tesla's Global Suppliers!
According to sources, Tesla has entered into global agreements with Tata Group, roping them in as an essential part of its supply chain network. These companies will collectively contribute up to $2 billion worth of Indian supplies to Musk's EV company. The American giant is also reported to be in talks with existing suppliers for setting up facilities near their factories. Doing so will enhance the efficiency of the supply ecosystem.
At present Tesla is known to be reliant on China and Taiwan for its supplies. The supply chain challenges during COVID-19 triggered it and the company soon started thinking about reducing its dependence on China for components.
With the new move, the company intends to procure the likes of wiring harnesses, gearboxes, forged components, castings, sheet metal, sophisticated electronics, suspension systems, electric powertrains, and ball and ceramic bearings from outside these countries.
Companies like Panasonic and LG have been supplying cells to the EV giant for long. BYD also supplies its famed Blade cells to Tesla. With the latest development, India will enter the supplier list as a strong player. The country could soon serve as a development and supply hub for the company's models in the future.
"Tesla is, in a way, readying the supplier base in India,"- a knowledgeable source reportedly told ET. In the upcoming years, when Tesla starts manufacturing cars in India, various local suppliers will benefit from sourcing- suggest sources. The EV giant could then be looking for local development and production of various components like castings, forgings, electronics, and fabrication items.
With the agreement with the Tatas in place, the Autocomp will provide specialised EV engineering products (which may also include battery packs) while Tata Technologies will supply comprehensive product lifecycle management services.
TCS will deliver the likes of circuit-board technologies and Tata Electronics will supply chips and related components. It will also provide circuit board assemblies for Tesla's Battery Management Systems (BMS), motor controller units and door control mechanisms. All these will happen once the manufacturing facility becomes operational.
Tesla is generally secretive about its supplier association and information on which of its components are made in-house and which aren't. From what we know, it produces the electric motors, battery packs, and chargers internally, but depends on international suppliers for various subassemblies, cells and components.
Will The Supply Chain Agreement Stand Valid In Tesla's India Business?
If at all the American manufacturer decides to go all out on local production of their electric vehicles (EVs) in India, having a strong supply network such as this would be a blessing. It will help in keeping manufacturing costs under check and in the long run, help in pricing the products competitively. Getting the math right on costs is of prime importance in a price-sensitive market like India. However, it remains to be seen if Tesla will consider investing in a factory here.
The current geopolitical winds in the United States suggest that it may pull back from setting up a factory initially. It is known to be in talks with automotive majors who are currently operating below peak capacity, to explore contract manufacturing of Tesla models in India. A Japanese and an Indian manufacturer are rumoured to be under consideration for this. What we know for sure is that initially, Tesla cars will reach our shores as Completely Built Units (CBUs).
More Indian Suppliers For The American Giant
Outside of the Tatas, Tesla has reportedly finalised partnerships with Indian companies like Samvardhana Motherson, Suprajit Engineering, Sona BLW Precision Forgings, Varroc Engineering, Bharat Forge, and Sandhar Technologies, for sourcing vital components.
The American company is carefully evaluating the financial side of things. Factors like tax advantages, financial incentives, and government backup will all play key roles in defining Tesla's future road map here. Some reports also say that it is in discussions with states like Rajasthan, Gujarat, Tamil Nadu, Maharashtra, and Telangana for setting up its India factory. We lack clarity on this though.