Tesla's Cybertruck launch sparks optimism for Indian auto component market

  • Industry News
  • Dec 07,23
Although the US and Canada dominate 54% of the global pickup truck market, initial reports suggest that Tesla's new offering could secure nearly 7% market share in its first year.
Tesla's Cybertruck launch sparks optimism for Indian auto component market

Tesla's unique electric pickup truck has been launched worldwide and is set to be available starting 2025. Although the US and Canada dominate 54% of the global pickup truck market, initial reports suggest that Tesla's new offering could secure nearly 7% market share in its first year. The question arises: how will this impact the Indian automotive market?

Interestingly, this launch by Elon Musk's company could have positive implications for the Indian auto component market. Commerce and Industry Minister Piyush Goyal revealed that Tesla is exploring sourcing components worth approximately $1.9 billion from India, almost double the amount sourced in the previous fiscal year, FY23. Recent stock movements in specific companies, such as Varroc Engineering (up 21.56% in the last month), Sandhar Technologies (up 30.69% in the last month), and Sona BLW Precision Forgings (up 1.30% in the last month), indicate a potential ripple effect.

According to Elara Capital, Sona BLW is poised to benefit significantly if the Cybertruck proves successful. The brokerage firm notes, "We remain watchful on whether this pickup truck takes away market share from key OEMs such as General Motors (GM), Ford, and Stellantis (majority of their profit in CY22 came from pickup trucks). While the negative impact would not be immediate, we will monitor this trend, especially for India’s auto component firms' exposure to the likes of GM, Ford, and Stellantis in the US."

In addition to Sona BLW, other auto component companies with exposure to these major players include SAMIL and Suprajit Engineering. Suprajit Engineering, based in Bengaluru, acquired the light-duty cable (LDC) business unit from Kongsberg Automotive in 2022, providing access to markets across the US, Germany, France, Sweden, and the UK.

Moreover, Sundram Fasteners, owned by the TVS Group, is actively contributing by manufacturing key parts in gear transmission for Tesla as it pursues its electric vehicle ambitions.

Studies suggest that if Tesla achieves its target production capacity of 250,000 units and an 80% capacity utilisation for the Cybertruck in CY25, it could secure a market share of 6-7% in the same year. Analysts at Elara Capital believe that, despite some viewing the Cybertruck customer base as niche, its unconventional design, features, performance, and the Tesla brand's allure could pleasantly surprise on the demand front, potentially impacting the ICE pickup trucks market of GM, Ford, and Stellantis.

Source: The Financial Express

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