Prospective Indian Tesla buyers hoping for locally made electric vehicles may have to wait much longer. Union Minister for Heavy Industries HD Kumaraswamy has confirmed that Tesla, led by Elon Musk, is not interested in manufacturing cars in India at this time. Instead, the American EV giant will focus on opening showrooms and establishing a retail presence, opting to sell imported vehicles rather than produce them domestically.
Despite India’s recent efforts to attract global EV manufacturers with a new policy that slashes import duties for companies willing to invest in local production, Tesla has chosen not to participate. The government’s scheme, which allows companies to import a limited number of electric vehicles at a reduced 15% tax (down from 70%), is contingent on a commitment to invest at least $486 million (about ₹4,150 crore) in local manufacturing within three years.
Minister Kumaraswamy stated, “Tesla...they are only to start showrooms. They are not interested in manufacturing in India.” He added that while European automakers like Mercedes-Benz, Skoda-Volkswagen, Hyundai, and Kia have shown interest in local production under the new EV policy, Tesla has not engaged in the application process beyond initial discussions.
Tesla’s hesitation stems from several factors:
High Import Duties: CEO Elon Musk has long cited India’s steep tariffs as a barrier to entry, arguing that they make Tesla’s vehicles uncompetitive compared to local and Chinese EVs.
Market Readiness: India’s EV market is still nascent, with electric vehicles making up less than 3% of total passenger car sales. Local brands like Tata Motors dominate, offering more affordable options.
Infrastructure and Demand: Challenges such as limited charging infrastructure and price-sensitive consumers have made Tesla cautious about large-scale investment.
Global Priorities: Tesla is currently facing increased competition and slowing sales globally, prompting a more conservative approach to new markets.
Tesla has already secured showroom locations in major cities like Mumbai and is hiring staff for retail and service operations. The company is expected to begin selling imported vehicles in India within the next few months, following certification and regulatory approvals.
While local manufacturing is off the table for now, the government has left the door open for future investment. “The real intent we’ll know when we open the application,” said Heavy Industry Secretary Kamran Rizvi, suggesting that Tesla could reconsider if market conditions change.
India’s new EV policy has attracted interest from several global players, including Mercedes-Benz, Volkswagen, Hyundai, and Kia, all of whom are exploring manufacturing opportunities in the country. The government’s goal is to boost EV sales to 30% of total car sales by 2030, up from the current 2.5%.
