Despite Trump Tariffs, Elon Musk-led Tesla Aiming To Source Parts $5 Billion From India This Year

Tesla Inc. is set to sharply ramp up its engagement with Indian auto component makers, with plans to double its sourcing from the country to about $5 billion during this year, according to people familiar with the matter. Notably, the Elon Musk-led firm's decision comes even as US President Donald Trump has imposed hefty tariffs on Indian exports.

The move is in line with the American EV maker's strategy to build a more resilient supply chain while reducing its reliance on traditional manufacturing hubs such as China and Taiwan. Tesla’s planned procurement of $5 billion this year represents a steep rise from about $1 billion in 2023 and nearly $2 billion in 2024.

Collaboration with domestic tier-1 players

Industry sources suggest the EV major is working closely with existing tier-1 Indian suppliers, including Sona BLW Precision Forgings, Hindalco Industries, Sundram Fasteners, Tata AutoComp Systems, Suprajit Engineering, Sandhar Technologies, Samvardhana Motherson International, Bosch India, Bharat Forge, Varroc Engineering, and Tata Technologies, among others.

While these companies have refrained from public comment due to non-disclosure agreements, insiders indicate that Tesla is steadily expanding the scope of components it buys from India. Its current procurement basket includes wiring harnesses, forged and cast components, gearboxes, electric motors, suspension systems, sheet metal assemblies, powertrain modules, bearings, and advanced electronics.

“Tesla is deepening its ties with Indian auto component makers and plans to sharply increase sourcing from the country this year. The company, which bought parts worth about $2 billion last year, is expected to double that figure in 2025,” a person familiar with the development said.

An emailed query sent by Republic Business to Tesla’s global spokesperson remained unanswered at the time of publishing.

Also Read: Tesla Charts Aggressive India Rollout, Expands Charging Network Ahead of September Rollout | Republic World

Supplying for Tesla’s €35,000 EV

The scaling up of sourcing is closely tied to Tesla’s development of a new, more affordable EV, internally codenamed “Redwood.” Expected to hit global markets in 2025–26, the compact crossover—speculated to be branded as either the Model 2 or Model Q—will be priced at around €35,000 in Europe.

Industry executives say the production scale of this entry-level EV could drive component orders worth billions of euros from suppliers, a substantial portion of which may be met by Indian firms.

Long-term interest despite manufacturing uncertainty

Despite ongoing discussions, Tesla has not yet committed to setting up a manufacturing facility in India. However, analysts see the aggressive procurement strategy as a strong signal of the company’s long-term interest in the market.

“Tesla partnering with Indian suppliers is a milestone for the country’s automotive ecosystem,” said Puneet Gupta, Director at S&P Global Mobility, adding “It will help the company cut costs, localise faster, and reduce dependence on China. For suppliers, working with Tesla boosts confidence and accelerates their integration into the global EV value chain.”

Market entry plans in India

Meanwhile, Tesla is preparing for a big entry into India with plans to rapidly grow its charging network and showrooms, aiming to be well-established in major cities before starting deliveries in September.

Tesla Regional Director for Southeast Asia, Isabel Fan, said the immediate focus is on Delhi-NCR, Mumbai and Bengaluru — cities expected to drive early adoption of the brand’s vehicles.