Tesla In India: Will They, Won’t They?

Will they, won’t they? The question now isn’t whether Tesla will make inroads in India. It is whether the Musk-led company will say yes to Modi’s Make In India campaign and start manufacturing here.

Petroleum Minister Hardeep Singh Puri told The Secretariat that negotiations regarding Tesla’s entry in India are currently ongoing. Geopolitical pressure, particularly from the Trump administration, could influence Tesla’s decision on where to set up its manufacturing base. 

Trump has in the past expressed his displeasure over Tesla setting up shop in India. In this case, Trump might question why Tesla is being encouraged to set up in India instead of the US and that such decisions are part of broader strategic negotiations where national interests are at play. 

The Petroleum Minister further told The Secretariat that India will prioritise securing favorable terms for itself rather than conceding to external pressure.

This is in line with a Reuters report which said that the US wants India to scrap tariffs on car imports. But India isn’t too keen on dropping them to zero right away.

India’s sky-high auto tariffs, which go up to 110 per cent, are the key issue. Musk has long complained about these steep taxes, even putting Tesla’s India plans on hold last year. Now, he’s got backup from Trump, who called out India’s high tariffs in Congress and hinted at hitting back with similar measures.

It seems that Trump seems to be doing the same — prioritising his country’s interest. He has previously expressed displeasure over Tesla setting up shop in India and has been critical of India’s high tariffs. Just recently, to show his support to the company and Musk, Trump bought a red Model S Tesla worth US$ 80,000.

Musk also announced on X that Tesla will double its vehicle production in the US within two years.

Following Trump's gesture, Tesla stock rose 7 per cent. Although Tesla’s shares have held steady through the ever-moving pendulum of the stock market, even weathering bearish trends better than most, the company lost nearly 50 per cent of its value from its December peak.

Calling the company “overrated”, Punnoose Tharyan, founding editor of Motown India Magazine, told The Secretariat, “Once upon a time, maybe a few years back, Tesla could have been considered a very decent luxury brand. But today, things have turned on its head for Tesla, especially with Elon Musk’s involvement at a political level with Donald Trump.”

Tesla’s sales are taking a hit worldwide. In Europe, Tesla sold half as many cars this January compared to last year, even though EV sales overall are up. 

In Germany, the EU’s biggest EV market, Tesla’s sales in February dropped over 70 per cent, with fewer than 1,500 new Teslas registered, despite a 30 per cent jump in overall EV sales. Similar drops happened in Portugal (down 50 per cent), France (down 45 per cent), Sweden (down 42 per cent), and Norway (down 48 per cent).  

Outside Europe, Tesla’s sales in Australia tanked over 70 per cent in February, and in China, shipments fell 49 per cent, the lowest since July 2022, while local rival BYD soared with a 161 per cent sales jump. Even in California, Tesla’s biggest US market, sales have been sliding for five straight quarters.

Will Indians Buy Tesla?

In India, an EV (manufactured locally) costs anywhere between Rs 9 lakh (Tata Tiago EV) and can go as high as Rs 66 lakh (Kia EV6). Even with reduced import tariffs, the cheapest Tesla (Model 3) will cost anywhere between Rs 35 to Rs 40 lakh in India, reported ANI.

Affordability will be key for Tesla to carve out a spot in India’s crowded EV market, where Tata Motors already dominates with a 73 per cent market share in 2024.

“You cannot expect Tesla to do well (in India). First and foremost, it's no more a brand you look up to. We have great brands which are doing extremely well,” said Tharyan.

India's EV sector has been experiencing significant growth, with major players poised to launch at least a dozen EVs in 2025. As a leading player in India's EV market, Tata Motors plans to invest US$ 1.5 billion in a domestic battery manufacturing facility, aiming to secure a local supply of lithium-ion cells by 2028. Whereas, Maruti Suzuki plans to launch its first EV, the e-Vitara SUV, catering to the growing demand for cleaner vehicles. 

“So for Tesla to do well, keeping in mind the ground realities here, is virtually impossible… All the other cars in India are offering pretty good technology in the electric vehicle space. The best thing Musk can do with his Tesla is not to enter India with his car,” quipped Tharyan.

A source, heading a leading global auto technology company, spoke to The Secretariat on condition of anonymity. They said Tesla's entry into India is unlikely to significantly impact the country's EV sector but will increase competition among existing brands, which the source sees as a positive development.

Whether Tesla makes it to India or not, the road ahead won’t be easy. With domestic players strengthening their grip on the market, Tesla will need more than just brand value to succeed. High tariffs, political crossfire, and affordability concerns create a tough playing field. And Musk’s alignment with Trump isn’t exactly helping matters.  

For now, Tesla remains on the sidelines, watching India’s EV market evolve without it.