Will Tesla find success on Indian roads amid pricing hurdles and policy uncertainty?

For India, Tesla’s entry marks a new chapter in the country’s electrification journey. Tesla launched its first experience centre in Mumbai’s Bandra Kurla Complex (BKC) on Tuesday, in the presence of Maharashtra Chief Minister Devendra Fadnavis. The company has launched its most popular model, Model Y (RWD), in India at a starting price of Rs 60 lakh. The price is, however, higher as compared to other markets such as the US (Rs 40 lakh), China (Rs 31.57 lakh) and Germany (Rs 46.57 lakh), owing to 70% import tariffs by India. With this pricing, Tesla will lock heads with Kia EV6, BYD Sealion, Hyundai Ioniq 5, BMW iX1 and Mercedes-Benz EQA. 

Despite multiple negotiations, Tesla’s entry into India’s EV market remains unconventional, choosing to import CBUs from China rather than setting up a local manufacturing unit, as required by the government.

While Tesla enjoys a fan base globally, its sales in some of the key markets such as the US, Europe and China are declining. The Chinese EV makers, led by BYD, are giving run for the money to the world’s largest electric vehicle manufacturer. In the second quarter of 2025, the electric vehicle manufacturer’s sales were down 13.5% year-on-year, even as Model Y continues to dominate globally. As per the China Passenger Car Association, Tesla’s sales slumped by 12% in the country.

Amidst the declining sales in other markets, India is likely to provide a boon for the electric vehicle manufacturer. “We’ve been working on getting into India. India is a very hot market. It will be a great market to enter because India has a big middle class,” Tesla CFO Vaibhav Taneja had told investors in April. 

But even as the electric vehicle manufacturer hopes to get some respite in sales with its India strategy, its journey in the domestic automobile market will be riddled with challenges. 

Challenges ahead

One of the biggest challenges for Tesla, as experts point out, would be in terms of price points and uncertainties around the India-US free trade agreement. Tesla is expected to import its models as a CBU in the next few years, until it decides on manufacturing in India. With uncertainties pertaining to India-US FTA, its decision to localise might take a back seat, making Tesla just a niche player. 

“There are a lot of uncertainties around the India-US FTA. Because otherwise, they are going to be a niche player. They will never be able to compete with the mass premium cars, which are tailor-made by domestic manufacturers,” points out Puneet Gupta, Director of India & ASEAN Auto Market at S&P Global Mobility. 

Another challenge that Tesla is expected to face in India is in terms of underdeveloped charging infrastructure. Isabella Fan, Regional Director, Tesla, has announced that the company will be installing V4 superchargers across Mumbai, Delhi, Noida and Gurugram. The pricing of superchargers is yet to be unveiled. S&P Mobility’s Gupta points out that, considering the company is covering only four cities and not the entire country, the adoption is likely to take time. 

“They are not targeting the entire country, and it (adoption) may take some time. The problem is that even if they can sell the vehicles, if there are no superchargers, then customers might not prioritise. So, it depends upon how soon they can ramp up their superchargers and dealer network across the country,” notes Gupta. 

Notably, Tesla’s success in India will also largely depend on its decision to manufacture in India. For long, Elon Musk has criticised the high import tariffs by India. At present, Tesla has decided to directly sell to customers. But the same model has not worked for several domestic players such as Ola Electric. 

“Tesla is already dealing with excess production capacity and facing sluggish sales in China, Europe, and the US. In a market like India, success is hard to predict without local manufacturing. If Tesla wants to make a mark here, setting up a manufacturing plant in India is essential. When it comes to Tesla, the focus isn’t just on making in India for the Indian market — it’s about manufacturing in India for the global stage,” says Gupta. 

According to Nikhil Dhaka, Vice President, Primus Partners, for Tesla to succeed, it must localise production, partner with policymakers, and invest in building consumer trust and support infrastructure, as the path ahead involves navigating complex market, regulatory, and infrastructural challenges.

Outlook ahead

Experts say that despite initial challenges, Tesla’s entry will give a significant boost to the domestic EV ecosystem. 

Vinay Raghunath, Partner, Automotive and Mobility Sector Leader, EY India, says that Tesla will elevate consumer awareness, spark greater interest in EVs and set new benchmarks in connected and autonomous mobility. “This move will also encourage OEMs and ecosystem players to step up innovation and accelerate investments in EV infrastructure and technology,” says Raghunath.