Tesla has recently shown strong interest in India, with CEO Elon Musk announcing plans to revisit the country later in 2025. Tesla is also reportedly exploring potential suppliers in India.
Currently, Tesla does not manufacture any vehicles in India but maintains showrooms in key cities such as New Delhi and Mumbai. Supply chain sources reveal that despite the Shanghai factory being critical for Tesla's production and sales, the plant sources parts predominantly from Chinese suppliers, prompting Tesla to diversify risks by actively seeking component suppliers outside China over recent years and planning assembly lines elsewhere.
Tesla has frequently requested sample submissions from suppliers outside China, specifying India as the shipment destination. This indicates a clear blueprint for their strategic layout in the region. While Tesla's renewed focus on India is not solely driven by recent US-China trade tensions, tariff issues have indeed raised alarms for many automakers, including Tesla.
Even as production or assembly shifts away from China, uncertainties remain regarding future US regulations targeting all material sources or lower-cost component suppliers whose raw material transparency is difficult to verify. Consequently, numerous automakers have begun sourcing raw materials and components beyond China to identify hidden risks early and implement preventive measures.
Previously, US President Donald Trump criticized Tesla's rumored plan to establish manufacturing facilities in India, describing it as a form of tax avoidance that is unfair to the US. However, supply chain analysts note that although India offers advantages like demographic dividends and labor cost benefits, Tesla appears to view India primarily as a springboard for exports to Southeast Asia and East Asia markets, aiming to establish it as a new export hub.
With Chinese automakers aggressively expanding into overseas markets through volume and pricing strategies, even Tesla feels pressured. Moreover, Elon Musk's close relationship with Trump could negatively impact Tesla amid rising patriotic sentiments. For Tesla, exploring new locations for both sales markets and assembly production is essential.
This is not Elon Musk's first expression of interest in India. His originally scheduled visit in April 2024 was postponed due to Tesla's "heavy responsibilities," only for him to soon visit China instead, sparking public debate within India.
Musk's statement about returning to India by 2025 remains under scrutiny among Indian stakeholders and supply chain players, who are keen to see whether this promise will be fulfilled or will become another empty pledge.
On April 21, 2025, the Economic Times, citing unnamed sources, reported that Tesla is exploring diversifying its global semiconductor supply chain by engaging with US-based Micron and India's CG Semi, part of the Murugappa Group. This follows a previous deal with Tata Electronics. Representatives from Tesla reportedly met with Micron, CG Semi, and Tata Electronics about six weeks ago to understand their chip capabilities, production timelines, and operational ramp-up.
According to the report, Tesla's move is driven by a desire to reduce reliance on Chinese fabs for mature-node chips due to increasing geopolitical risks and costs. Several Tata Group companies are already Tesla's global suppliers and anticipate a larger role if Tesla expands into India.
Article translated by Jingyue Hsiao and edited by Jerry Chen
