Tesla is poised to significantly enhance its partnership with Indian suppliers, with plans to procure automotive components worth nearly $2 billion from the country, according to statements made by Union Minister Piyush Goyal.
Speaking at the 63rd Annual Session of the Automobile Component Manufacturers Association of India, Goyal revealed that Tesla's commitment for this year includes sourcing automotive components valued between $1.7 billion and $1.9 billion from India. This marks a substantial increase compared to the approximately $1 billion worth of auto parts that Tesla acquired from Indian suppliers in 2022.
The road to establishing a Gigafactory in India appeared uncertain after prolonged negotiations regarding high import taxes reached an impasse last year. Tesla advocated for reducing or eliminating import taxes on electric vehicles (EVs), which can be as high as 100%, while India stood firm on its stance that it would consider lowering import taxes only if Tesla committed to opening a manufacturing facility within the country.
However, negotiations were rekindled earlier this year, culminating in an in-person meeting between Tesla CEO Elon Musk and Prime Minister Narendra Modi. Following the meeting, Musk expressed his company's intention to make a substantial investment in India “as soon as humanly possible.”
Subsequently, reports surfaced indicating that Tesla was in discussions to construct a factory in India with an annual production capacity of up to 500,000 electric vehicles (EVs). While specific vehicle models to be manufactured at the facility remain undisclosed, it was suggested that Giga India would primarily focus on producing Tesla's next-generation platform, initially slated for launch at Giga Texas, diverging from the previous plan of Giga Mexico.