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Billionaire Elon Musk-led electric vehicle giant Tesla has reportedly finalized a strategic deal with Tata Electronics to secure semiconductor chips essential for its global operations.
According to an ET report, the deal positions Tata Electronics as a key supplier in Tesla's expanding supply chain. The partnership is particularly significant as Tesla looks to reduce its dependency on traditional supply bases like China, especially post-COVID.
Elon Musk's anticipated visit
Tesla CEO Elon Musk is expected to visit India soon, where he plans to meet with Prime Minister Narendra Modi. Musk recently confirmed this in a post on X.
"Looking forward to meeting with Prime Minister Narendra Modi in India!" he wrote in his post.
Looking forward to meeting with Prime Minister @NarendraModi in India!
— Elon Musk (@elonmusk) April 10, 2024
Expanding Tesla’s footprint in India
Musk's visit to India was much anticipated as he is also expected to make an announcement related to the company's plans to invest and open a new factory in the country.
Earlier reports claimed that Tesla would be sending its team from the United States to India by late April to study potential sites. The team would focus on states known for their automotive hubs, such as Maharashtra, Gujarat, and Tamil Nadu. These states also offer the added benefit of port access for exports.
The agreement with Tata Electronics is part of Tesla's broader strategy to establish a significant presence in India, the world's fastest-growing automotive market.
The Indian government's recent policy adjustments have lowered import taxes on some electric vehicle models to 15% from 100%, provided the automaker invests at least $500 million and sets up a manufacturing facility.
The company is reportedly exploring sites in Gujarat and Maharashtra for a plant that could involve an investment of about $2 billion.
Boost to local manufacturing
According to Ashok Chandak, president of the India Electronics and Semiconductor Association (IESA), Tesla's efforts to build a local supplier ecosystem for electronics and subsystems demonstrate its commitment to diversifying its supply chain.
The company is expected to invest $2-3 billion in setting up operations to manufacture electric vehicles, initially focusing on premium models and possibly extending to entry-level vehicles in the future.
Tata Electronics’ expansion
Tata Electronics has been ramping up its capabilities by hiring top-level international experts and expanding its semiconductor manufacturing facilities in Hosur, Dholera, and Assam.
These expansions, part of a $14 billion investment, aim to bolster India's position in the semiconductor industry and support global clients like Tesla in establishing a comprehensive supply chain within the country.