Musk will be visiting India to meet PM Modi later in April and will likely announce plans to invest and open a new factory in the country, according to reports
Shares of several auto ancillary companies including Sandhar Tech and Sona BLW Precision surged up to 7 percent on April 12 after Tesla CEO Elon Musk announced his India visit. In a post on the X platform on April 10, Musk said that he is looking forward to meeting Prime Minister Narendra Modi in India.
The visit is being seen as a step forward in bringing Tesla to India, causing shares of Indian companies that provide parts to the EV maker to rise.
Last year in June, following a meeting with PM Modi in New York, Elon Musk said, “I am confident that Tesla will be in India... as soon as humanly possible.” On the upcoming visit, the Tesla boss is expected to announce his ambitious project of setting up a factory in India.
Reports suggest that Tesla may invest up to $3 billion and set up a factory to manufacture entry-level electric cars locally. These cars, speculated to be Model 2, may be priced around Rs 25 lakh.
Musk's visit is also being seen as a sign of Tesla's India entry as this is coming days after India unveiled an electric vehicle policy, which seeks to give more concessions to those foreign carmakers, who currently sell fully imported cars in India, but commit to local investments to start manufacturing in the country.
Tesla's India supplier base in focus
According to the Bloomberg supplier database, Tesla has five suppliers based in India, including Sona BLW Precision Forgings, Hindalco Industries, Samvardhana Motherson International, Suprajit Engineering, and Varroc Engineering.
The specific products Tesla has been obtaining from these suppliers are still uncertain, but these companies stand to gain should Tesla begin local manufacturing.
Tesla has already agreed to the Indian government’s suggestion to set up a vendor base in India. The company has reportedly been asked to begin the assembly of electric cars in India, followed by setting up the vendor base.
Currently, more than half of Tesla’s global production takes place in China, and if Tesla decides to start manufacturing in India, it will have to relocate its vendors from China to India.
For the same, Tesla has reportedly been having talks with auto component suppliers Sandhar Technologies and Bharat Forge, which are already supplying components to Tesla.
Shares of Tesla's India supplier rally
Shares of Sona Blw Precision Forgings, which designs, manufactures, and supplies systems and components for the automotive industry in India and internationally, surged over 7.5 percent to an intraday high of Rs 706.10 on the National Stock Exchange (NSE).
SKF India's share price also rose nearly 3 percent, following reports of Musk's visit. The company provides automotive and industrial-engineered solutions through bearings and units, seals, lubrication, condition monitoring, and maintenance services.
Its parent company has worked with Tesla right from the time Elon Musk's firm launched its first sports car in 2008.
Sandhar Technologies stock also gained nearly 3 percent on April 12. The company manufactured two components for the wiper system assembly for the Tesla Model 3. It has since been manufacturing various components for Tesla directly or through technical collaborations. It will be among the primary beneficiaries if Tesla starts manufacturing in India.
Shares of another Tesla supplier Suprajit Engineering also rose 2 percent intraday. The company started supplying its products to Tesla and several other global firms in 2022 after acquiring the Light Duty Cable (LDC) business unit of a Norwegian company Kongsberg Automotive ASA,
Varroc Engineering bagged its first order from Tesla in 2017 under which it provided the entire lighting system for the Tesla Model S sedan and Tesla Model X crossover.
Since then, Varroc has bagged multiple orders from Tesla and is one of the top names on the list if Tesla plans to set up a manufacturing plant in India. The shares of the company, however, were trading in the red.
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