Apple and Tesla turn to India as China struggles under an intense energy crisis

Apple, Jinping, Tesla, India, China

China is running out of power because it is running out of coal. China’s capacity to produce thermal power has taken a massive hit, and the effect of the same is now being seen across heavy Chinese industries. China has once again resorted to power rationing. Factories, entire industries, small businesses – they are all being told to stop consuming electricity. Needless to say, without electricity, the economy of any nation will simply collapse. And then, China’s economy has hardly been in the best shape of late.

Also read: Apple, Tesla rethink dependence on China as Chinese suppliers run out of power

TFI had recently reported how Apple and Tesla have directly been impacted by China’s electricity woes, and the same promises to be the end of their Chinese adventure. Several Apple and Tesla suppliers have suspended production at some Chinese factories for a number of days to comply with tighter energy consumption policies. Now, multinational companies are being forced to rethink their operations in China. Apple, in any case, has been looking to diversify its production options and has been turning to India after steadily abandoning China.

India Set to Gain Big at China’s Expense

Tesla and Apple now aim to rewrite their India manufacturing story next year as Covid-19 slows down in the country and India paces fast towards vaccinating all eligible adults by the end of this year. According to IANS, both Elon Musk and Tim Cook had announced a big-bang entry into the country. Musk wanted his electric cars to run on the domestic roads (despite import duty concerns) while Cook announced plans to open Apple’s first branded retail store (in Mumbai), along with a thrust on assembling and manufacturing more Apple products in the country.

These plans could not be fructified in 2021 itself due to the second wave of the pandemic and a global semiconductor shortage. With things expected to ease on the semiconductor front only by next year, Apple and Tesla are both once again looking to turn to India for major operations.

Tesla’s Interest in India

Prime Minister Narendra Modi is pushing for electric vehicles to become the new standard in India. Last month, the Modi government approved a Rs 26,058 crore PLI scheme (Production-Linked Incentive) which promotes advanced technologies, most important among which is electric battery technology to be used for the propulsion of India’s electric vehicle space. The scheme focuses specifically on EVs and Hydrogen fuel cell vehicles and their components. According to the government, it expects the PLI scheme to bring in investments of Rs 42,500 crore.

Read more: While China’s export economy collapses, India’s quarterly exports touch $100 billion for the first time ever

Therefore, it is only natural for Tesla to get attracted to India and its upcoming EV market – which promises to be among the largest in the world a few years down the line. According to Soumen Mandal, a research analyst quoted by IANS, India is believed to become one of the largest EV markets soon and Tesla is aware of the same. Mandal added, “None of the big automakers wants to leave out the opportunity to acquire a share in the India market. Tesla is not an exception in this. The cheap availability of resources and lower labour cost will allow Tesla as well as other automakers to earn a higher profit if they set up a local manufacturing or assembly plan.”

Apple’s Abandonment of China

Meanwhile, as reported by TFI earlier this year, Prime Minister Narendra Modi’s ambitious Production Linked Incentive (PLI) scheme has started yielding sweet returns as tech behemoth Apple had announced that it would shift its iPad manufacturing from China to India this year. According to media reports, Apple, which has steadily raised production of iPhones in India to lessen its dependence on Chinese manufacturing, took part in the PLI scheme via its contract manufacturers and is keen to set its base in the country.

India is scoring big on all major economic parameters. The naysayers believe that India’s economy is in a bad shape, but data has been proving them wrong consistently. India is well on the path of recovering from the drawdown caused by two waves of the Covid-19 pandemic in the country. The determination of MNCs like Apple and Tesla to ‘Make in India’ speaks to the same effect.