Michelle ThompsonAfter years of speculation, Tesla appears to be gearing up for its long-awaited entry into India.
The American EV giant has started recruiting for multiple positions in Delhi and Mumbai while also reportedly scouting for showroom locations in both cities.
As Tesla faces declining global EV sales and rising competition from Chinese manufacturers, India—Asia’s third-largest economy—presents a compelling growth opportunity.
However, a crucial question remains: Can Tesla succeed in India’s price-sensitive market?
Tata Motors currently dominates the Indian EV sector with over 60% market share, followed by MG Motors—jointly owned by India’s JSW and a Chinese firm—at 22%. Mahindra and Mahindra also hold a share of the market.
The EVs produced by these companies cost less than half of Tesla’s base model, which is expected to be priced around $40,000 (£31,637). This positions Tesla as a luxury brand, competing with premium EVs from Hyundai, BMW, and Mercedes.
Given the pricing, Tesla’s market share in India may remain minimal unless it introduces a more affordable model tailored for the country.
Beyond pricing, India’s road conditions present another challenge.
Tesla vehicles have low ground clearance, making them less suited for Indian roads. Adapting existing models would require re-engineering, significantly increasing production costs.
Would Tesla be willing to make such modifications for a single developing market with limited sales potential?
“Even for other premium global manufacturers with low sales volumes, major engineering changes have been difficult to justify,” said Hormazd Sorabjee, editor of Autocar India, in an interview with the BBC.
Furthermore, despite the growing interest in EVs, they still account for less than 3% of total passenger vehicle sales in India. The development of supporting infrastructure, such as charging stations, has been slow, with only around 25,000 stations available nationwide.
Ultimately, Tesla will be entering a small yet expanding EV market, where it will need to carve out space amid growing competition.
Tesla CEO Elon Musk (left) met with Indian Prime Minister Narendra Modi in Washington, D.C., last month.
At the policy level, India is making significant efforts to attract Tesla.
The country has set an ambitious goal for electrification, aiming for 30% of private cars, 70% of commercial vehicles, 40% of buses, and 80% of two- and three-wheelers to be electric by 2030. Many state governments have also introduced EV policies to boost both demand and supply.
India’s EV subsidies rank among the highest globally, with incentives covering up to 46% of the price of the country’s best-selling electric car, according to HSBC Securities.
As a result, passenger EV sales have surged by over 2,000% in less than five years, rising from just 4,700 units annually to 100,000.
“The price gap between conventional and electric vehicles has narrowed significantly, making buyers reconsider their options,” says Jyoti Gulia, founder of JMK Research.
In April last year, India also lowered import duties on EVs for global automakers willing to invest $500 million (£400 million) and establish local production within three years.
Now, Tesla and other imported EVs priced above $35,000 (£27,550) can benefit from a reduced 15% import duty on up to 8,000 vehicles—a move that followed Elon Musk’s concerns about high tariffs blocking Tesla’s entry into India.
“This is a strategic approach, as it compels global players to localize production—exactly how the market operates: come and build in India,” says Hormazd Sorabjee.
However, this policy could disadvantage domestic automakers, as HSBC research notes that the investment requirement for foreign firms is relatively low compared to Indian manufacturers.
Additionally, the 15% import duty on EVs is significantly lower than the tax imposed on comparable internal combustion engine cars, which also incur additional road taxes.
In the past five years, India’s annual EV sales have surged from 4,700 to 100,000 vehicles.
Domestic EV manufacturers emphasize the importance of a “level playing field” but remain largely unfazed by Tesla’s anticipated entry.
“We welcome competition,” said Rajesh Jejurikar, Executive Director and CEO of Mahindra and Mahindra, in an interview with the BBC. He believes that more players will strengthen India’s EV ecosystem, and his company is focused on enhancing its product offerings.
Concerns such as “range anxiety”—the fear that an EV’s battery may not last an entire journey—have been addressed through “robust battery integration and extensive real-world testing across various road conditions,” Jejurikar noted. He added that Mahindra is incorporating cutting-edge technology into its vehicles.
However, Tesla’s advanced battery technology and superior user interface will set it apart from competitors, says Hormazd Sorabjee.
Another factor working in Tesla’s favor is the rising demand for premium vehicles in India. As a globally recognized brand with a strong aspirational appeal, Tesla ownership is expected to become a status symbol among India’s affluent and younger population.
Despite India’s supportive EV policies and the increasing demand for high-end cars, Tesla has yet to commit to establishing a manufacturing facility in the country.
For now, it appears Tesla will rely on imports from its overseas factories.
The timeline for local production will depend on several factors, including the expansion of India’s affluent consumer base and the outcome of trade negotiations between India and the U.S.
Former U.S. President Donald Trump has already expressed concerns about Tesla potentially setting up a factory in India, stating in a recent Fox News interview that it would be “unfair” to American interests.
Could this “America First” stance discourage Elon Musk from investing in an Indian manufacturing plant?
While the question remains open, it seems India will first see high-end Tesla showrooms catering to the wealthy rather than factories creating jobs for the broader workforce.
