Tesla, Tata in deal to acquire semiconductor chips

In a move that reiterates Elon Musk’s growing interest in India as an investment hub, the US billionaire’s electric vehicle company Tesla has entered into a strategic deal with Tata Electronics to acquire semiconductor chips for its operations all over the world.

The development comes in the wake of Musk’s recent confirmation that he would visit India on April 21 and 22, during which he is scheduled to have a meeting with Prime Minister Narendra Modi and discuss possible investment options in this country. Musk is expected to make a few big announcements during his India trip including a multi-billion dollar investment to set up a Tesla manufacturing unit here.

Specifics about the Tesla-Tata deal, which was quietly executed some months ago, are yet to be disclosed, as neither company has officially commented on it, according to an exclusive report in The Economic Times. The report added that Tata Electronics has so far invested $14 billion in the semiconductor business, setting up manufacturing units in Dholera, Hosur and Assam. Tata has also expanded its workforce and signed up several high-rank executives for the venture.

On April 4, thesquirrels.in had reported how Tesla intends to finalise a location for an electric vehicle (EV) manufacturing plant worth $2 billion to $3 billion. Consequently, reports in various publications cited sources to suggest that Mukesh Ambani’s Reliance Industries Limited (RIL) could partner Musk’s Tesla in the project. Tesla would seek a different partner in India only if talks with RIL did not fructify.

Changes in import duty policy that have been brought about lately would seem just apt for Tesla to import its EV models to India even as the company sets up a local production unit. Recent policy rejig allows automobile manufacturers to import EVs with a minimum price of $35,000 at a reduced import duty of 15 per cent, as long as the company in question invests $500 million within three years to set up manufacturing units in India.