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Tata Electronics to supply Tesla with semiconductors, Musk eyeballing India as next move

April 16, 2024

Tesla has reportedly signed an agreement with Tata Electronics, a semiconductor manufacturer, to procure semiconductor chips for its global operations.

Tesla’s interest in India extends beyond local revenue generation, as the country represents the world’s fastest-growing major automotive market. Elon Musk, is expected to visit India this month for a meeting with Prime Minister Narendra Modi, where potential Indian investments, including funds for EV manufacturing facilities, may be announced.

The specifics of the Tesla-Tata Electronics sourcing deal, including its value, have not been disclosed. Ashok Chandak, president of India Electronics and Semiconductor Association (IESA), noted that Tesla’s decision to create a local supplier ecosystem for electronics and subsystems indicates its independence from a single market. However, he emphasized the need for improvement in the local sourcing of semiconductors.

Industry experts estimate that Tesla may invest at least $2-3 billion in India to manufacture electric cars. Recent policy changes have reduced the import duty for EVs priced at $35,000 or higher to 15%, contingent on automakers committing to invest $500 million within three years to establish manufacturing plants in India.

Tata Electronics has recently increased its workforce by recruiting 50-60 top-level expatriates, leveraging their expertise in semiconductor technology, strategic planning, and design to enhance its business operations. The company has established semiconductor manufacturing facilities in Hosur (Tamil Nadu), Dholera (Gujarat), and Assam, with plans to expand operations and build a well-connected supply system in the country.