NEW DELHI – Tesla Inc. is preparing to open its first showrooms in India, marking a long-anticipated entry into a significant auto market. Reports from Bloomberg indicate the company will launch its first location in Mumbai in July, with another site planned for New Delhi.
Early batches of Model Y SUVs, produced at Tesla’s Shanghai facility, are already on their way. This step follows a key meeting between CEO Elon Musk and Prime Minister Narendra Modi earlier this year in Washington, D.C. New government policies, such as reduced import taxes, now signal support for Tesla’s ambitions, but the company faces obstacles in a market known for price sensitivity and limited electric vehicle infrastructure.
Tesla’s journey into India has seen repeated setbacks, mainly due to high import taxes and local manufacturing demands. Until 2024, India charged a 110 percent import duty on finished cars, making Tesla’s vehicles too expensive for most buyers. That changed with the EV policy rolled out in March 2024, which lowered the import tax to 15 percent for EVs priced above $35,000.
This comes with conditions: manufacturers must commit at least $500 million and set up local production within three years. Many see this shift as a direct effort to bring Tesla into the Indian market.
The meeting between Musk and Modi in February 2025 was a turning point. Modi shared on X that they discussed topics including technology and innovation, with a focus on strong collaboration in new sectors.
Soon after, Tesla started shipping thousands of Model Y SUVs to Mumbai. The company has also signed leases for showrooms in top cities and is hiring for roles in sales, customer service, and operations, showing clear intent to establish itself in India.
Understanding India’s EV Market
India’s electric vehicle market is growing, but still lags behind global leaders like China. In 2024, just over 5 percent of new car sales in India were electric, according to registration records. Local automakers such as Tata Motors dominate with low-cost models, some priced around $15,000. MG Motors, backed by Chinese partners, is also a key player.
Tesla’s Model Y, costing about $31,988 before duties and over $25,000 more in taxes, will mainly attract wealthy buyers in a country where most shoppers look for value.
Industry analysts believe Tesla will first test consumer interest by importing vehicles before building them locally. According to a BNP Paribas analysis, the company’s focus will be cautious, as local car prices tend to be much lower.
Some also point out that Tesla’s low ground clearance could be an issue on India’s bumpy roads, and the sparse charging network might put off buyers. Yet, with India curbing Chinese investments, Tesla faces less competition in the high-end EV segment, as noted by Puneet Gupta from S&P Global Mobility.
India’s push for sustainability lines up with Tesla’s goals. As the third-largest emitter of greenhouse gases, India has set a target to reach net-zero by 2070 and wants electric vehicles to account for 30 percent of private car sales by 2030.
The government’s SMEC policy, introduced in March 2024, encourages global EV makers to invest and build locally, which could lessen reliance on imports and boost domestic jobs. Tesla is expected to take advantage of this policy, with possible investments between $2 and $3 billion in new manufacturing plants over the next few years.
Import duties for premium EVs above $40,000 have dropped from 110 percent to 70 percent alongside the new SMEC policy. However, other charges, such as a 40 percent tax for agriculture infrastructure, keep the overall tax burden high. Despite these extra costs, Tesla’s move into India is widely seen as a calculated bet on a growing upper-middle class and the country’s long-term appeal as a manufacturing base.
Tesla’s Global Challenges and India’s Potential
Tesla is moving into India at a time when it faces pressure in its main markets. Sales in the first quarter of 2025 were the lowest in three years, due to tough competition from Chinese brands like BYD and negative attention tied to Musk’s political activity.
The company’s share price ($TSLA) has been unstable, but news of the India launch has lifted investor confidence. Many on social media are spreading optimism, suggesting Tesla’s plans for more affordable models and expansion in India could boost its valuation.
However, U.S. President Donald Trump’s criticism of Tesla’s plans to build in India, calling it unfair to American workers, points to ongoing trade tensions. While reciprocal tariffs could cause issues, Musk’s connections in Washington may help smooth the process.
Tesla faces a challenging road in India. The company benefits from new import rules and government support, but it must stand out in a market filled with affordable domestic EVs and address gaps in charging infrastructure. The departure of Prashanth Menon, Tesla’s India lead, in May 2025, and the absence of a replacement, have raised questions about leadership. For now, teams based in China are managing Indian operations.
Indian buyers, especially in big cities like Mumbai and Delhi, are showing interest. Nikhil Chaudhary, founder of Tesla Club India, says excitement is high among his 20,000 followers on X. Tesla’s strong brand and focus on innovation could appeal to India’s eco-conscious urban buyers.
Tesla’s entry into India is about more than selling cars. For Musk, it opens a fast-growing market with long-term potential. For Modi, it supports India’s plan to become a global manufacturing centre and meet green targets.
As the first Model Y vehicles reach Mumbai, all eyes are on how Tesla will handle the unique challenges of the Indian market and what this step means for the future of electric mobility in the country.
