Despite Trump’s tariffs, Tesla doubles auto component sourcing from India to $4–4.5 billion

Tesla Inc. significantly expanded its engagement with Indian auto component manufacturers in calendar year 2025, sourcing parts worth an estimated $4–4.5 billion from the country—nearly double the value procured a year earlier—according to people familiar with the matter. The sharp scale-up came even as US President Donald Trump imposed steep tariffs on a range of Indian exports, creating fresh trade friction between the two countries.

The sourcing push underscores Tesla’s effort to diversify and strengthen its global supply chain at a time when geopolitical risks, tariff barriers and overdependence on traditional manufacturing hubs such as China and Taiwan have become key concerns for global automakers.

Tesla’s procurement from India has risen rapidly over the past three years—from about $1 billion in 2023 to nearly $2 billion in 2024—before accelerating sharply in 2025. Industry executives said India has emerged as one of Tesla’s “fastest-growing” sourcing bases outside North America.

Deepening ties with Indian tier-1 suppliers

The Elon Musk-led electric vehicle maker has worked closely with several Indian tier-1 component 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.

Spokespersons of the aforementioned companies could not be reached for comment owing to non-disclosure agreements with Tesla. However, people aware of the development said Tesla steadily expanded both the scale and complexity of components sourced from India during the year.

The procurement basket spans wiring harnesses, forged and cast parts, gearboxes, electric motors, suspension systems, sheet metal assemblies, powertrain modules, bearings and advanced electronic components, as per well-informed sources.

“Tesla significantly deepened its supplier relationships in India in 2025. From sourcing parts worth roughly $2 billion the previous year, the company effectively more than doubled its procurement during the year,” said one person with direct knowledge of the matter.

An emailed query sent to Tesla’s global spokesperson remained unanswered at the time of publication.

Linked to affordable EV programme

Industry executives linked the surge in sourcing to Tesla’s development of a more affordable electric vehicle, internally codenamed “Redwood.” The compact crossover—widely expected to be positioned below the Model 3 and Model Y and priced at around €35,000 in Europe—is understood to be in advanced stages of preparation for a global rollout.

The anticipated production volumes for the entry-level model have driven component orders running into several billion euros, with Indian suppliers accounting for a meaningful share of those requirements, executives said.

Tariffs fail to derail sourcing strategy

Tesla’s increased engagement with Indian suppliers comes against the backdrop of renewed trade tensions after President Trump raised tariffs on Indian goods, citing trade imbalances and domestic manufacturing priorities. While the higher duties have weighed on several export-oriented sectors, auto component makers supplying global OEMs through long-term contracts have remained relatively insulated.

Analysts said Tesla’s sourcing decisions appear to be guided more by cost competitiveness, engineering capabilities and supply-chain resilience than by short-term tariff headwinds.

“Partnering with Indian suppliers is strategically important for Tesla,” said Puneet Gupta, Director at S&P Global Mobility. “It helps the company reduce costs, localise faster and lower dependence on China. For Indian suppliers, working with Tesla enhances credibility and accelerates their integration into the global EV value chain.”

Manufacturing plans remain uncertain

Despite the sharp rise in sourcing, Tesla has not committed to setting up a manufacturing facility in India so far. Analysts, however, see the expanding procurement footprint as a signal of the company’s longer-term interest in the country’s automotive ecosystem, even as policy and tariff uncertainties continue to shape investment decisions.