Tata Motors & Tesla – Is something cooking? [Update]

Rumours about the Tesla-Tata Motors partnership on the Indian business channels were fueled when the TatamotorsEV Twitter handle, which is for Tata Motors’ EV business, made a pun with a classic Bollywood love song and welcomed Tesla to India with a post after news broke about Tesla registering in India. The tweet has since been deleted.

“Aajkal tere mere pyaar ke charche hain akhbaar mein, Sab ko malum hai aur sabko khabar ho gayi!”, said the Tweet tagging Elon Musk and Tesla with hashtags WelcomeTesla and TeslaInIndia. This may have been the case of Tata indulging in friendly cross-brand banter or welcoming the competitor in a cheeky way.

On 11 January 2021, it emerged on the web that Tata Motors would sign an MoU with Tesla, which would see the Indian major manufacture and sell Tesla electric cars in India. The rumors, reported by Economic Times, indicated that Tesla had already conducted their due diligence and had found Tata Motors to have the best infrastructure among top players. Shares of Tata Motors surged nearly 13 per cent because of the rumour.

However, Tata Motors denied the rumor. “Tata Motors has not taken any decision regarding a strategic partner for its PV business and categorically denies any and all rumors suggesting the same,” the company said later the same day.

Base Tesla Model 3 Standard Range Plus white front quarters
The China-made Tesla Model Y is nearly INR 14 lakhs cheaper than the USA-made model thanks to lower manufacturing cost and localization.

It is to be noted that in April last year, the Board of Tata Motors had approved a plan to make the passenger vehicle division, including the electric vehicles, a separate subsidiary. The ‘spin-off’ would attempt to give the Indian maker some independence, with reports indicating that Tata’s Chinese JV partner, Chery, could benefit for their Indian entry with shared platforms and components. However, the following geo-political situation between the two countries has poured cold water on these developments effectively ruling out investments or a stake sale in the new Tata subsidiary involving a Chinese brand.

Tesla on the other hand, which confirmed its Indian entry for this year (via CEO Elon Musk confirming that its online portal in India is likely to be up in January 2021) is yet to reveal the sales and manufacturing plan for its products. Mr Nitin Gadkari, Minister of Road Transport & Highways, Micro, Small & Medium Enterprises, suggested in an interview in December 2020 that Tesla would likely import cars via the CBU route, at least initially, and then on the basis of customer response would decide on manufacturing.

Tata Nexon EV front three quarter view 2 - Auto Expo 2020
Sales of the Tata Nexon EV crossed 2,600 units since its launch in March 2020, despite the Covid-19 pandemic.

Despite the geo-political tensions, Tesla’s Gigafactory Shanghai seems to be the forerunner to supply the Indian market. The China-made Tesla Model Y is nearly the equivalent of INR 14 lakhs cheaper than its American made counterpart thanks to localization, adaptation and lower cost of manufacturing.

If Tesla were to consider Tata’s facilities (which have the capacity to take up more assembly, especially the Pune plant), it could choose between the Sanand plant (which makes the entry level Tiago and Tigor), or the Pune plant (which makes the Harrier, Altroz and Nexon EV); the standard Nexon is made at a JV plant between Tata and FCA at Ranjangaon, which also makes the Jeep Compass for domestic and RHD export markets.

Featured image source: Tesla