Elon Musk Bets Big On India, Tesla May Source Parts $4 Bn This Fiscal

In a move that could significantly boost India’s electric vehicle (EV) ecosystem, Tesla Inc. is reportedly planning to double its auto component sourcing from the country to an estimated $4 billion in the current fiscal year, according to sources familiar with the development.

If confirmed, the decision reflects the Elon Musk-led EV giant’s deepening engagement with Indian suppliers as it seeks to diversify its global supply chain and reduce reliance on traditional manufacturing hubs like China and Taiwan. The move also marks a sharp increase from the estimated $1 billion sourced in FY23 and nearly $2 billion in FY24.

According to industry insiders, Tesla is expected to more than double its sourcing from existing tier-1 suppliers in India. These include leading names such as Sona BLW Precision Forgings, Hindalco Industries, Sundram Fasteners Ltd, Tata AutoComp Systems, Suprajit Engineering, Sandhar Technologies, Samvardhana Motherson International, Bosch India, Bharat Forge, Varroc Engineering, and Tata Technologies, among others.

“Tesla is intensifying its engagement with Indian auto component manufacturers, aiming to significantly boost its sourcing volumes from the country during this fiscal. While the company procured components worth around $2 billion last year, that figure is expected to double in FY2025-26,” said a source aware of the company’s plans.

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An emailed query sent by Republic Business to Tesla’s global spokesperson remained unanswered at the time of publishing. Representatives from the aforementioned component firms could not be contacted for comments due to non-disclosure agreements (NDAs) with Tesla.

Currently, Tesla’s sourcing from India spans a wide range of parts, including wiring harnesses, forged and cast components, electric motors, gearboxes, suspension systems, sheet metal components, electric powertrain modules, ceramic and ball bearings, and high-value electronics.

Supplying for Tesla’s €35,000 EV

Republic Business had earlier reported that Tesla is collaborating with Indian vendors for critical components — including interior and exterior parts as well as automotive electronics — for an upcoming model speculated to be a compact crossover, expected to be priced around €35,000 in Europe.

“The quantity of components for Tesla’s new affordable EV will be higher due to the anticipated production scale. This could eventually translate to sourcing components worth billions of euros for a single EV platform,” said a source privy to the development.

Tesla is reportedly developing the new battery-powered model under the internal codename “Redwood.” Slated for a global launch in 2025, the vehicle — rumored to be called either the Model 2 or Model Q — is expected to be the most affordable offering in Tesla’s lineup.

While Tesla has yet to set up a manufacturing facility in India, its growing procurement from the country could signal the company’s long-term commitment to the Indian market. Talks between Tesla and Indian government officials about potential local production and market entry have been ongoing, although no formal agreement has been finalized.

Industry analysts believe that Tesla’s collaboration with Indian suppliers marks a significant milestone for India’s automotive sector. According to Puneet Gupta, Director at S&P Global Mobility, “It will help Tesla cut costs, accelerate localisation, build a stronger supply chain, and reduce reliance on imports—especially from China. Indian suppliers are actively exploring investments in advanced technology and EV components, which further strengthens India’s position as a key global player in the EV supply chain.” He also noted that the association with Tata will instill confidence in suppliers, enabling them to learn and adapt to the Indian market environment.