Elon Musk's Tesla to prioritise D2C model before manufacturing as govt gears up for EV policy roll-out

As the Indian government prepares to roll out its electric vehicle (EV) policy in April, which allows automobile companies to import vehicles at 15% import duty, Tesla is expected to initially focus on its direct-to-consumer (D2C) sales model in India. The U.S.-based automaker may begin operations by importing vehicles and selling through company-owned stores before evaluating local manufacturing at a later stage, sources told Business Today.

The upcoming Scheme for Promotion of Manufacturing of Electric Passenger Cars in India (SPMEPCI)  which is likely to be rolled out in April is designed to attract global EV manufacturers by offering incentives such as reduced import duties and support for local production. The policy aims to position India as a key EV manufacturing hub.

The Scheme for Promotion of Manufacturing of Electric Passenger Cars in India (SPMEPCI) aims to attract global EV manufacturers by offering import duty reductions from 70% to 15% on up to 8,000 vehicles per year, provided companies commit to local manufacturing. To qualify, manufacturers must invest at least ₹4,150 crore ($500 million) within three years and meet domestic value addition (DVA) targets of 25% by the third year and 50% by the fifth year. Additionally, up to 5% of the committed investment can be allocated toward charging infrastructure development. The policy allows greenfield and brownfield investments, positioning India as a key hub for EV production.

While Tesla has not yet participated in recent government consultations on the EV policy, sources indicate that the company is closely monitoring developments and evaluating its options.

"In mid-January, we invited stakeholders, including OEMs, for discussions on the policy, but no Tesla representative attended," said an official.

Tesla is expected to enter India through its D2C model, aligning with its global strategy of selling vehicles directly to customers. Depending on market dynamics and policy considerations, the company may explore manufacturing in India in the future.

Meanwhile, automakers such as Hyundai, Kia, and Volkswagen have expressed interest in the new policy and may take advantage of its incentives.

"We would welcome Tesla’s investment in India as it would create jobs and strengthen local supply chains," the source added.