Tesla to Prioritize Showrooms Over Manufacturing in India According to Union Minister's Statement
Tesla is set to enter the Indian market by opening showrooms and importing electric vehicles, but the company has no immediate plans for local manufacturing under the new EV policy.
The showrooms are expected to open in the Bandra Kurla Complex in Mumbai and Aerocity in New Delhi. Tesla signed a five-year lease for the Mumbai showroom in February 2025.
India has launched a new electric vehicle manufacturing scheme, which mandates a minimum investment of ₹4,150 crore (C$666,000) and requires manufacturers to achieve 25% local production within three years, and 50% within five years.
However, Tesla's cautious approach to the Indian market is due to high import duties and a strategic focus on market testing. India imposes steep import tariffs, up to 100%, on fully built imported vehicles, which Tesla has repeatedly criticized as a major obstacle. The company is entering India by launching showrooms and importing Model Y SUVs built in China to assess demand before committing to local production.
Despite negotiations and government attempts to persuade Tesla to set up a factory, Elon Musk and Tesla executives remain unconvinced about establishing manufacturing operations anytime soon.
Recent policy changes, such as the reduction of import taxes on EVs, may reduce pressure to manufacture locally immediately, though high tariffs still exist for many vehicles.
Tesla's initial focus in India will be on importing vehicles and opening showrooms. The company has also started recruitment of Autopilot test drivers in India.
Despite international pressures, such as those from U.S. President Donald Trump who has publicly stated that it would be "unfair" for American companies like Tesla to establish manufacturing plants in India to sidestep U.S. import tariffs, Tesla has been quietly laying the groundwork for its India launch.
- To validate market demand, Tesla is set to import Model Y SUVs from China for a test drive, despite high import tariffs and no immediate plans for local manufacturing in India.
- In the automotive industry, Tesla's decisions are influenced by financial considerations, as the company prioritizes market testing and technology over immediate local manufacturing, due to the challenging government regulations in India.
- Amidst the various challenges and pressures, Tesla is progressing gradually, focusing on business strategies such as opening showrooms, recruiting Autopilot test drivers, and considering the impact of recent policy changes on import taxes for electric vehicles.
