Holding out an Olive branch ? No, entire Olive Tree !

 

Context :

Govt Wants Tesla To Buy Local Auto Parts Worth $500    /   abplive  /  16 Feb 2022

Extract :

The government wants Tesla Inc to commit sourcing at least $500 million of auto components from India for the electric carmaker’s request for an import tax cut on its vehicles to be considered, Bloomberg reported quoting a source in the know.

According to the report, Tesla would need to agree to ramp up Indian parts purchases by around 10 per cent to 15 per cent a year until a satisfactory level was achieved, the person said, asking not to be named because the discussions are private.

The Centre has formally told Tesla to ramp up domestic sourcing, but is yet to relay a procurement target to the company, the person said. Tesla in August claimed it sourced around $100 million in parts from India.

The government has said it is keen for Tesla to make cars in the country, but appears to be using their interest to try and gain benefits for the Indian industry.

To progress on its tax-cut bid, Tesla must approach the government with a component-sourcing plan that’s proportional to its car sales forecast in India, the person said. It should also export made-in-India components to China if it plans to import cars from there, the person told Bloomberg.

Tesla and a representative for India’s ministry of transport didn’t respond to requests for comment.

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MY  TAKE  :

Hey Elon , What is so difficult ?........................... [ 15 Aug 2021 ]

 

Extract :

Obviously, GOI would want any Foreign Manufacturer to gradually increase “ local value addition “, to take it to ( say ), 90 % over a 5 Year period , leaving only 10 % ( by value ) imported items at the end of 5 years

I urge, Tesla to examine following program – and if feasible send it (with changes if required ), to GOI

This could form a basis for further discussions / finalization

If an agreement is reached, it would serve as a BENCH-MARK for all other Foreign Manufacturers wanting to make / sell, electric vehicles in India

      Tesla to commit to following PHASED MANUFACTURING PROGRAM for making Model 3 in India

Year ( Ap-Mar)	Items to be procured locally	Value Addition % ( For the Year )	Value Addition % ( Cumulative )
22 - 23	NIL ( Import of fully assembled cars )	-	-
23 - 24	KDU – Knocked Down Units ( Add Assy Hours )	5	5
24 - 25	Tyres / Chasis / Body / Electricals  / Windows / Dashboards ..etc	10	15
25 - 26	Li-ion Battery	40	55
26 - 27	Sensors - Cameras – GPS locators	15	70
27 - 28	Autonomous Navigation Devices ( Radar – Lidar  )	20	90

NOTES :

Ø  Above mentioned list of components / sub-assys / Assys etc., is only illustrative. Tesla may expand

Ø  For each component / sub-assy.,Tesla would need to provide CIF prices ( $ and Rs ), if imported , and providing names of its own current suppliers of each ( country-wise )

Ø  Value Addition must be shown as a percentage of the final Ex-Factory selling price of Model 3

Ø  In case of depreciation of Rupee vis-à-vis Dollar , local value addition must not suffer ( get reduced )

Ø  Tesla should file with GOI, a quarterly RETURN , showing current value addition and cars sold   

 Dear Elon ( press@tesla.com ),

Ø  You claim that Tesla purchased from India, parts worth $ 100 million, SO FAR

Ø  Assuming that these purchase covered past 2 years, that works out to $ 50 million / year

Ø  I further assume that , during 2022 – 23, you will import / sell some 5,000 Model 3 in India, for a total CIF value of $ 200 million ( @ $ 40,000 per car )

Ø  Dividing $ 50 million by $ 200 million = 25 %

Ø  Goes to show that, if the same parts were used for “ locally assembled “ cars, it would amount to a “ local value addition “ of ( as high as ) 25 % , in the very FIRST YEAR itself !

I urge your Business Development Team, to go through my following earlier e-mails to help formulate your ENTRY STRATEGY for India

 

With regards,

Hemen Parekh  /  hcp@RecruitGuru.com / 17 Feb 2022