Shares of seven listed Indian companies supplying parts to Tesla surged today, lifted by optimism over the EV giant’s accelerating India plans. Sandhar Technologies rose 5 percent, SKF India gained 2.5 percent, Sundaram Fasteners climbed 2.2 percent, Varroc Engineering added 2 percent, Suprajit Engineering and Sona BLW were up 1 percent each, while Bharat Forge dipped 0.17 percent.
The American giant is on a hunt for land to begin its manufacturing foray in India, with Maharashtra emerging as the frontrunner, The Economic Times reported on February 19. Elon Musk’s Tesla has set its sights on Maharashtra, drawn by its existing office in Pune and a strong network of suppliers in the state. Sources suggest that the state government has pitched sites near Chakan and Chikhali—both close to Pune—for Tesla’s potential manufacturing hub. Chakan, one of India’s largest auto manufacturing clusters, is already home to major players like Mercedes-Benz, Tata Motors, and Volkswagen.
Tesla in India has been humming in the ears of Indians ever since Prime Minister Narendra Modi met the CEO of Tesla Motors Elon Musk, last week. Well, it seems that a lot has been happening behind the curtains to help the American EV giant roll on Indian roads soon.
Though Tesla’s India plans are still in their early stages and could take a couple of years to fully unfold, analysts see a massive opportunity for the country’s auto ancillary sector. It’s not just a win for companies already supplying parts to the EV giant—Tesla’s arrival could open doors for many more Indian firms eager to get a slice of the action.
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While Tesla has yet to commit to manufacturing its electric cars in India, it plans to ramp up sourcing from Indian OEM suppliers. Industry estimates suggest that this procurement from the domestic ecosystem could surge in the coming years, crossing the $1 billion mark by 2025.
"It is not just a sentimental boost, this is a big positive for Indian auto ancillary companies if this is to happen," Siddhartha Khemka, Head of Research and Wealth Management at Motilal Oswal said in a conversation with Moneycontrol. Indian auto ancillary companies that already export components to Tesla’s US operations could benefit from additional business if Tesla establishes an Indian plant. "Since these suppliers were chosen based on quality and cost competitiveness, they could continue exporting to Tesla’s global factories while also supplying the Indian market," Khemka added.
"Tesla’s preference for cost-effective and localized sourcing could bring more opportunities for Indian component manufacturers in precision manufacturing, lightweight materials and advanced electronics in the long run," Shridhar Kallani, Auto Analyst at Axis Securities told Moneycontrol. "This could accelerate R&D and innovation in the Indian automotive component ecosystem to enhance capabilities and meet global standards," Kallani said.
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However, it remains to be seen what price points Tesla will target. This gains significance as EV penetration in India hasn't picked up as quickly as stakeholders had initially hoped for. To put into perspective, India’s electric car sales neared 100,000 units last year compared to China’s 11 lakh.
In a sign of growing momentum, Tesla has reportedly reached out to senior executives at Tata Motors to fill key positions. The EV giant has also posted job listings for 13 roles, spanning customer-facing and back-end functions, on LinkedIn.
Tesla’s India journey has seen years of back-and-forth, largely due to concerns over steep import duties. But with the government now slashing basic customs duty on high-end cars priced above $40,000 from 110 percent to 70 percent, the road for Tesla’s entry seems easier.
"However, reduced import duties could encourage luxury EV makers to enter India, increasing demand for high-end components such as advanced electronics and battery technology. Indian suppliers offering premium vehicles could benefit," Kallani added.
Seven listed Indian companies that supply parts to Tesla saw a surge in trading today, driven by a sentimental boost. Sandhar Technologies (up 5%), SKF India (up 2.5%), Sundaram Fasteners (up 2.2%), Varroc Engineering (up 2%), Bharat Forge (down 0.17%), Suprajit Engineering (up 1%), and Sona BLW (up 1%).
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