Tesla-Tata Electronics prudent deal boosts India’s semiconductor ambitions

New Delhi: Elon Musk’s Tesla has signed a strategic agreement with Tata Electronics to source semiconductor chips for its global operations with an aim to expand into the Indian market, The Economic Times reported on April 15. This deal, executed discreetly a few months ago, establishes Tata Electronics as a reliable supplier to top-tier international customers looking to locate a critical component of their semiconductor value chain within India.

Tesla, the world’s largest automotive company by market value, is keen to expand its footprint in India, the fastest growing major automotive market globally. Founder and CEO of the US-based EV maker, Elon Musk is visiting India this month and is expected to meet Prime Minister Narendra Modi. The report said the Tesla CEO is likely to make major announcements during his visit to India, including a firm commitment to finance facilities that manufacture electronic vehicles.

India Electronics and Semiconductor Association (IESA) President Ashok Chandak said Tesla’s decision to create a local supplier ecosystem for electronics and subsystems reflects its commitment to diversify its supply chains and not be overly dependent on a single market . “The major concern is local sourcing of semiconductors, and this requires improving the supply chain as the value addition is very high for the industrial and automotive segments,” ET report.ET quoted Chandak as saying.

EV development in India

According to a recent report by research firm Counterpoint, electric vehicle (EV) sales in India are expected to grow 66 percent this year before almost doubling in 2023 as state subsidies help fuel demand and supporting infrastructure in the country. . This comes as India’s EV sales are set to nearly double in 2023 due to rising consumer interest and concerns over climate change.

Projections to 2024 show the share of EVs in total passenger vehicle (PV) sales increasing due to new entrants and government subsidies. By 2030, EVs are expected to represent about a third of India’s PV market, indicating a strong long-term growth trajectory in the country’s automotive sector, the research firm said in its report published late last week.