Tesla touches down, but will it build in India?

After nearly a decade of public flirtation, earnest lobbying, and policy tangoes, Tesla has finally managed to dip a toe into India’s confounding and sprawling electric vehicle market. The global EV leader officially launched its first Experience Centre in Mumbai’s Bandra Kurla Complex on July 15, showcasing China-made Model Y SUVs priced between Rs 60 lakh and Rs 80 lakh, complete with full self-driving (FSD) as an extra option.

However, this added feature comes with a lot of caveats. While the FSD feature is available for purchase, it will cost an extra Rs 6 lakh, and its activation and use in India are subject to regulatory bodies in India. As you can imagine, a self-driven car on Mumbai roads might lead to a mishap or two. Also, while the Model Y comes with the basic autopilot features, its full FSD capabilities are not yet fully enabled or approved by the Indian regulatory authorities.

Tesla’s entrance into the Indian automobile market has been a highly symbolic move. However, let’s be clear: Tesla has still not committed to building any factory in India—yet. Talk of a multi-billion-dollar plant still remains in the realm of speculation. No industry or jobs for Indians, yet.

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Still, Tesla’s arrival marks a significant milestone for India’s EV ambitions. This isn’t just a car launch—it’s the beginning of a high-stakes geopolitical and commercial experiment.

It has been a long courtship, a troubled romance, one might call it.

Tesla’s interest in India isn’t new. Elon Musk first tweeted about wanting to bring his EVs to India back in 2015. Since then, it’s been a saga worthy of a political thriller. Tesla demanded tariff reductions—India retorted with “build here, not just sell.” Musk accused India of protectionism; we countered with, “You’re welcome here, just don’t try to be special.”

India imposes import duties of 60 per cent on EVs priced below $40,000 and 100% on those above. For a company like Tesla—whose cheapest car, the Model 3, costs around $40,000 in the U.S.—these duties would make the cars laughably unaffordable for Indian buyers. Musk argued for what he felt was a fair trial: let us sell, test the waters, and then we’ll build.

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We replied: Waters are tested with feet, not sports cars.

In March 2024, India unveiled a new EV policy, offering import duty cuts to 15 per cent for automakers committing to invest at least $500 million in India and start manufacturing within three years. Tesla welcomed the move, and though there have been whispers of a manufacturing facility in Gujarat or Maharashtra, so far there has been no official confirmation of a factory or an investment.

So, why is this of significance for India?

Well, primarily, market scale. India sells 4-6 million vehicles annually, yet EVs currently make up just 4-5 per cent of that. The government aims for a 30 per cent EV share by 2030.

Then there is the premium EV niche. Tesla is playing a luxury segment game. They’re not competing with Tata or Mahindra, but with BMW, Mercedes-Benz, and Kia EV6.

Trickle-down potential is also substantial. The policy is designed intentionally narrow—only 8,000 EVs can annually benefit from lower duty, targeting higher-end global marques.

For India, we hope that Tesla’s entry will catalyse infrastructure reboot, charging networks, and tech transfer.

Of course, the potential of future jobs and tech that could mushroom out of this is stupendous. A future Tesla factory could generate 5,000 to 10,000 direct jobs and tens of thousands of indirect jobs. However, this is only going to be possible once the investment materializes.

So, is India ready to start writing cheques for Tesla cars?

There are quite a few obstacles ahead.

Price sensitivity: It remains a huge factor. At Rs 60-68 lakh, a Model Y costs 3-4 times the average new car in India (around Rs 8-15 lakh). The vast middle class still remains out of reach.

Infrastructure infancy: While Tesla commits to opening Superchargers in Mumbai and Delhi, full country rollout is expected to take several years.

No factory equals no scale: Without local production, Tesla remains crippled by high tariffs, making affordability and volume growth near impossible.

Domestic and global competition: Tata, MG, Hyundai, BYD, and Ola are all ramping up EV portfolios—often at prices half of Tesla’s.

Regulatory/commercial terms still unclear: This is a big one. Rules are solid, but bureaucracy and localisation mandates (25-50 per cent value addition) could slow Tesla’s investments.

Geopolitical economics: India’s push for domestic manufacturing may face higher competition from players already committed to the investment scheme. For example, Mercedes, Hyundai, etc.

For India, there are more than a few upsides.

Tesla’s presence cements India’s status as an open and modern EV investment destination. Tesla’s high-end ecosystem could also give charging networks a stronger foundation. Design, manufacturing, and R&D spillovers will definitely benefit vendors, suppliers, and Indian engineers.

Also, if India becomes an export hub (e.g., through a Delhi-EU Free Trade Agreement and the Berlin connection), global EV shipments could begin.

Tesla’s arrival is definitely a good omen—symbols matter—but the real test will be localization and scale. Will India let Tesla play luxury ball only, or build it towards democratic pricing?

For India to win, the deal must be deeper than high-end imports. We will need genuine investment, factory creation, skill solutions, and infrastructure—along with accountability on the $500 million-plus scheme.

Tesla can choose to remain niche; however, the real opportunity lies in deepening roots in the Indian mobility story.

We will be watching Tesla’s announcements on Delhi showroom openings, Supercharger build-out, possible Model 3 import, and—crucially—any plans for local manufacturing within India’s three-year window.

The India–Tesla courtship has been a thrilling ride—and it’s far from over.

The author is a freelance journalist and features writer based out of Delhi. Her main areas of focus are politics, social issues, climate change and lifestyle-related topics. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.