Power shift: How Tesla's turmoil is steering global capital towards India
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India's EV Ecosystem: Charging Ahead as Tesla Slows Down
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In the high-stakes arena of global business and politics, few collisions make markets tremble like the fallout between a tech titan and a political juggernaut. This is exactly what unfolded in early June 2025 when Elon Musk , the CEO of Tesla and SpaceX, clashed publicly with former U.S. President Donald Trump . The result? This was a devastating blow to Tesla's stock, which plunged by over 14% in a single day, wiping out an estimated $150 billion in market capitalisation. This was not just a stock market blip; it was the most severe single-day loss for Tesla since its listing and one of the most dramatic wealth erasures in corporate history.The catalyst? Trump's verbal attacks on Musk during a campaign rally, accusing him of being "disloyal" and threatening to cut off federal contracts and regulatory support for Tesla and SpaceX if he regains the presidency, were also included. Investors responded with a swift selloff, and Tesla's valuation fell below the trillion-dollar mark. Global markets watched in shock as this political-personal feud spilled over into financial chaos.However, amid this volatility lies a powerful truth: in global disruption, emerging markets like India often find their greatest opportunities. As the U.S. grapples with political instability and tech industry turbulence, India stands poised to benefit from capital reallocation, tech realignment, and supply chain diversification. While damaging to U.S. markets, the Tesla shockwave could become a springboard for India's clean-tech and high-growth sectors.India has been on an accelerated path toward electrification, and Tesla's current struggles have only sharpened the global spotlight on India's domestic electric vehicle (EV) ecosystem. As Tesla faces regulatory headwinds and reduced investor confidence, India's homegrown EV sector is booming, powered by market demand and policy incentives.In the fiscal year 2024–25, India's EV market crossed a new milestone with over 1.7 million electric vehicles sold, reflecting a 96% year-on-year increase. Leading the charge are Indian companies such as Tata Motors, Mahindra Electric, and Ola Electric, which have committed billions of rupees to expand their EV product lines, charging infrastructure, and battery assembly capabilities.The Indian government's Faster Adoption and Manufacturing of Hybrid and Electric Vehicles(FAME-II) scheme and the Production-Linked Incentive (PLI) Scheme for Advanced Chemistry Cell Battery Storage worth ₹18,100 crore have further catalysed industry momentum. States such as Tamil Nadu, Gujarat, and Maharashtra have introduced EV-specific policies offering land, tax exemptions, and power subsidies to manufacturers. As global investors rethink high-risk bets in politically volatile environments such as the U.S., they are increasingly drawn to India's policy stability, market scale, and rising consumer demand.Analysts at Morgan Stanley and Goldman Sachs recently highlighted India's EV sector as a 'structural investment theme' for the next decade. Tesla's hiccups may prompt global auto majors to partner with or invest in Indian EV startups as a hedge against Western uncertainty, creating an entirely new lane for India's industrial growth.Tesla's valuation collapse was not just a corporate crisis; it exposed the deeper fragility of global supply chains tethered to geopolitical risks. Tesla's core supply lines depend heavily on rare earth elements (REEs), lithium, and semiconductors, many of which are sourced from China, South America, or politically sensitive regions.With U.S.–China tensions rising and Trump threatening tighter trade policies, the world's clean energy future needs new anchors—and India is stepping into that vacuum. In response to the rising global demand and strategic concerns, India unveiled its Critical Minerals Strategy (2023), identifying 30 minerals, including lithium, cobalt, and nickel, as essential for national security and industrial development.The Geological Survey of India discovered a significant 5.9-million-ton lithium reserve in Jammu and Kashmir—India's first—and auction processes are already underway for its commercial extraction. Meanwhile, India's semiconductor manufacturing mission—backed by a ₹76,000 crore incentive package—has begun bearing fruit. Micron Technology, in collaboration with Tata Group, is establishing chip assembly and testing units in Gujarat. These developments are being closely monitored by global players looking to diversify away from China and the U.S. India's proven IT prowess, skilled workforce, and competitive cost structures provide it with a unique advantage in scaling both battery and semiconductor supply chains.According to BloombergNEF, global clean energy investments are expected to cross $2 trillion in 2025, and India is projected to attract nearly $60 billion, up from $45 billion in 2024. The Tesla–Trump debacle added urgency to this diversification. Indian companies working in battery storage, solar inverters, EV components, and green hydrogen can now tap into redirected global capital that would have otherwise flown into American companies.Moreover, India's space technology sector, often overlooked, is quietly booming. As Trump's remarks also targeted SpaceX and its satellite network Starlink, Indian startups like Skyroot Aerospace, Agnikul Cosmos, and Pixxel are seizing the moment to attract international investments. With 30 private satellite launches scheduled for 2025 and a supportive government ecosystem, India's space economy could grow to $13 billion by 2026, up from $7 billion in 2022, according to the EY-ISpA.The Musk–Trump standoff may have caused a ripple of fear in U.S. markets, but for India, it is a signal to act. As Western investors reassess the risks of politicised corporate battles, India offers a pragmatic alternative rooted in stable policy, scalable infrastructure, and strategic clarity. The Tesla fallout, while costly for America's most iconic EV brand, might accelerate India's emergence as a global industrial and investment powerhouse. In the wreckage of a $150 billion loss lies the blueprint for India's trillion-dollar leap.The contributors is Assistant Professor and Research Supervisor, St. Thomas College (Autonomous), Thrissur – Kerala.
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