As geopolitical tensions are on the rise and the subsequent pandemic era disrupts business growth, Tesla is quietly exploring alternative suppliers in India as it diversifies its semiconductor supply chain away from China. Sources report that Tesla has held talks with three major Indian chip ventures – US memory giant Micron’s new Gujarat assembly/testing plant, CG Semi (a Murugappa Group-led OSAT project), and Tata Electronics.
Image Source: https://www.tomsguide.com/
Micron’s USD 2.7 billion Gujarat facility is slated for automotive-grade chip assembly and test, CG Semi’s Sanand unit (a JV with Japan’s Renesas and Taiwan’s Stars Microelectronics) will perform outsourced semiconductor assembly and test (OSAT) for Renesas and others, and Tata Electronics has announced massive investments for a fab in Dholera (Gujarat) plus INR 27 billion (approx. USD 319.39 million) for an assembly and test plant in Assam. These legacy-node facilities (28-65 nm) cater to EV components (battery controllers, ECUs, infotainment) and enjoy Indian government support, wherein the Union Cabinet recently approved Tata Electronics’ INR 91 billion (USD 1.08 billion) semiconductor fab plan.
Tesla’s pivot to India comes just after the United States and European demand for EVs softened. Global supply chains are being ‘rethought’ in response to shocks. An independent analyst has noted in the context that Tesla’s Shanghai gigafactory still relies on Chinese fabs for mature-node chips, but “escalating geopolitical tensions and cost increases” are forcing the company to reconsider its sourcing strategy.
Meanwhile, India’s car market, recognised as the world’s third-largest at present, has seen overall vehicle sales rise (4.3 million in 2024) even as EVs remain in a smaller slice (only 2.5 per cent of sales).
Tesla is not the only one tapping the Indian market. Foreign automakers are scrambling to tap this lesser-explored EV sector. Mercedes-Benz recently launched several local EV models (including a made-in-India EQS SUV) and sees growing uptake among affluent buyers. BMW, likewise, is rolling out more EV models and expects electrics to form a bigger share of sales this calendar year. It is a bonus point in this stance that Mercedes and BMW combined sold well over 50,000 electrified cars in India in 2022-24, far outpacing Tesla’s absence.) In Germany, by contrast, EV registrations actually plunged, and Tesla’s own German sales fell 41 per cent year-on-year, highlighting the regional unevenness of the EV boom.
India’s fledgling EV market is growing fast (nearly 100,000 EVs sold in 2024, up 20 per cent year-over-year), aided by government incentives, a large pool of younger buyers, and models from both local (Tata, Mahindra) and global brands (BYD, VW, Hyundai). India’s government has set ambitious targets (30 per cent of auto sales by 2030) and is courting foreign investment – it recently slashed EV import duties to 15 per cent under its new policy in hopes of luring companies like Tesla.
Thus, Tesla’s sudden venture in India, within days of CEO Elon Musk’s teleconference with Prime Minister Narendra Modi on February 13, 2025, Tesla advertised 13 new job openings in India (showroom managers, service and support staff in Mumbai/Delhi). Musk even told Modi on the call that “India should have electric cars like every other country” – and later publicly confirmed he was “looking forward to visiting India later this year!”. Prime Minister Modi similarly tweeted that he and Musk discussed collaboration in “technology and innovation” (and observers believe renewable energy and space tech were also on the agenda).
Events
e-Magazines
Reports
Responses
