Tesla Launches in India: Can Elon Musk's EV Giant Win Over Indian Consumers?

Who is Tesla's actual competition in India? What is Elon Musk's long-term plan in India versus China? We find out.

Elon Musk's premium EV company Tesla officially entered India on Tuesday, 15 July, launching its first showroom in Mumbai with its Model Y SUV.

(Photo: Kamran Akhter/The Quint)

"Tesla may be able to do what Apple did with the iPhone in India. If they can create an aspirational market for EVs, and create buzz among people, then Tesla may become the next iPhone of cars."

Elon Musk's premium electric vehicle (EV) company Tesla officially entered India on Tuesday, 15 July, launching its first showroom in Mumbai with its Model Y SUV.

Tesla's India debut comes months after a meeting between Prime Minister Narendra Modi and Musk in Washington DC in February this year which featured talks on tariff reductions on the import of EVs, among other significant issues.

Even as the EV giant has been keen on diversifying its sales, and launching its products in hitherto untapped markets such as India, automobile experts and market pundits are divided over the influence that Tesla will have on India's resource-deficient – but slowly growing – EV sector.

The Quint explains how much of an impact its launch will make in the domestic EV sector, how it will it impact competition for EV cars in India, and whether it can sustain itself in the country in the long run.

Who is Tesla's Actual Competition in India? 

When Tesla announced its decision to launch its cars in India, it was predicted to offer stiff competition to domestic EV manufacturers such as Tata Motors, MG Motors, and Mahindra & Mahindra.

Tata dominates the Indian EV scene with a market share of 60 percent, followed by China's MG Motors at 22 percent, and then Mahindra & Mahindra, as per CarLelo.

However, Tesla cars are usually purchased by the cream of society, with even the base model of its cheapest car, Model 3, costing around $42,000 (Rs 36 lakh) — which is far above the purchasing capacity of a majority of Indians. Tesla's most expensive car is expected to cost over Rs 2 crore.

On the other hand, domestic EV manufacturers offer a range of budget vehicles, far lower in cost compared to Tesla. In fact, Tata's most expensive EV (Curvv) costs around Rs 22 lakh – which is Rs 14 lakh lower than Tesla's cheapest car.

Hence, comparing Tesla with domestic EV companies, just because they both manufacture electric vehicles, is like comparing apples and oranges.

But then the question is, who will Tesla actually compete with?

Darab Ali, a tech and auto reviewer, says that Tesla's actual competition would be with high-end car manufacturers in India instead of mainstream brands.

"If Tesla studies the Indian market, they will realise that Indian buyers usually don't purchase EVs costing over Rs 1 crore. And even if they do, they go for high-end vehicles like BMWs or Mercedes," he opines.

"Given that Tesla is a premium-segment car, brands like Tata and Mahindra should not concern themselves much with its launch in the Indian market."

Darab Ali

On the other hand, Konark Tyagi, a tech and auto journalist for Jagran New Media, says that Tesla's initial goal would be to initiate a brand-building exercise.

"Tesla will start off by launching their brand in India and then probably look at India as a manufacturing hub and an alternative to China. As we know, the US under Donald Trump wants to move away from too much reliance on Chinese products," he says.

China is one of the largest markets for Tesla vehicles, apart from the US and Europe. In 2019, the car company had opened a factory in China called Gigafactory Shanghai to manufacture Tesla vehicles.

"Tesla has to start somewhere, and they are doing so by starting imports to India. But the bigger picture would be to view India as a possible replacement for China in terms of car production."

Konark Tyagi

A Myriad of 'India-Specific' Challenges for Tesla

Meanwhile, a large number of challenges – both financial and infrastructural – await Tesla in India.

• To start with, EV sales make up for around 3 percent of overall passenger vehicle sales in India. Hence, the EV sector is still at a nascent stage in the country.

• Secondly, Tesla vehicles have extremely low ground clearance i.e. the distance between the lowest point of a vehicle's undercarriage and the road. For instance, the Tesla Model Y's ground clearance is a mere 6.6 inches. Hence, it will be extremely difficult for Tesla cars to ply on standard Indian roads – strewn with potholes, speed breakers, and uneven surfaces.

In order to make Tesla cars adaptable to Indian conditions, the company might have to manufacture specially engineered vehicles, which is bound to push its production cost upwards. The burden of the additional cost would eventually be borne by the consumer – who is already dishing out a premium to purchase a Tesla. Hence, this presents the company with a paradoxical situation.

• Thirdly, India's EV infrastructure is far from sufficient, with a mere 25,000 charging stations across the country out of which only a fraction work efficiently. On the other hand, as per data from January 2023, there are just over 85,000 operational petrol pumps in India, according to the Petroleum Planning and Analysis Cell.

"If Tesla sets up shop in India, their goal will be 'infra first, product second'," says Konark Tyagi. "The first thing they will do is launch around 30-40 superchargers in all the major cities."

Tesla superchargers are charging facilities launched by the company which can add up to 200 miles of range within 15-20 minutes.

"For instance, in the California belt you will find a Tesla supercharger every 3-5 miles — so that changes the ballgame of owning an EV because then you can juice up your car within minutes when you're on the go," Tyagi adds.

Moreover, the disparity between charging stations and petrol pumps could actually be used as an advantage – not just for Tesla but for the growth of the EV sector in general.

"There is a change that is coming into the petrol pump infrastructure in India," says Deepanshu Mohan, professor of economics and market expert.

"There is a case to be made for the development of charging stations in collaboration with these entities. So, if you have a Reliance or Jio petrol pump, and you align charging stations to be set up there, then you could see some marginal differences taking place in the EV segment."

Deepanshu Mohan

Indian Govt 'Wooing' Tesla to the Peril of Domestic EVs?

Meanwhile, speculation is rife that the Indian government is planning to reduce import tariffs on EVs from the current 110 percent to 15 percent. This comes amid trade talks between the Modi and Trump governments to overhaul India's entire tariff structure.

India's high tariff rates and regulatory challenges were among the several hurdles which prevented Musk from launching Tesla in the country during talks in 2022.

However, the proposal to slash tariffs has raised important questions, particularly about whether the Indian government is incentivising Tesla to come to India at the cost of domestic EV manufacturers.

"I feel the government aiming to slash import tariffs is unfair because you are basically giving benefits to foreign entities instead of local companies, which are actually the ones developing proper R&D in the country," says Darab Ali.

However, there is also a flipside to the Indian government's decision.

The slashing of import tariffs is bound to attract global players like Tesla and thus make the EV sector more competitive, which would force domestic companies to up their game and come up with cheaper, better-quality products.

"Say, if Mahindra sells a vehicle which is competitively at a higher price, and it expects competition from Tesla, it might be looking towards a budget EV which will help the company have a larger market share," says Deepanshu Mohan.

This will create a competitive cycle, whereby a change of strategies by domestic players would also make the foreign entrant more creative and force them to innovate to cater to the Indian market.

"The beneficiary of this entire exercise will be the Indian consumer," Mohan added.

In another push for Tesla's India debut, Finance Minister Nirmala Sitharaman had announced during her Budget speech this year that 35 additional capital goods used in the production of EVs will be exempted from import duties.

The government also announced a target for EVs to constitute 30 percent of new private vehicle registrations by 2030, which would mean 80 million more EVs on Indian roads.

Bottom Line

Now, given all the benefits and challenges for Tesla, can the company sustain itself in the long run in India?

That would depend on a number of factors: first and foremost, on how many cars it can actually sell.

"If you see the current pricing mechanism of Tesla, it's beyond the reach of any mass market car buyer in India. If Tesla comes with its own niche product for the Indian market, then there would be something to talk about," Mohan says.

Further, Tesla has not agreed to manufacture locally in India yet—and will sell its cars on an imports-only basis as a Completely Built Unit (CBU).

This has raised doubts on its employment generation potential in India, and whether the Indian government's bounty of benefits for them in terms of tariff incentives is a fair trade-off.

While Tesla has already started hiring people in India to set up their offices and service vehicles, the employment generation won't be anywhere close to what it would have been had it decided to set up factories.

However, the company may decide to set up local manufacturing in the long run, depending on its market impact. When BMW, Mercedes, and Audi were launched in India, they, too, came via the imports route. But with time all of the companies started local manufacturing units as their sales picked up.

Furthermore, there is a caveat in Tesla's impact on India's EV sector. While it is predicted to make a minor dent in domestic competition, the one factor that it can use to its advantage is the tag of a "status symbol".

"Tesla may be able to do what Apple did with the iPhone in India. If they can create an aspirational market for EVs, and create buzz among people, then Tesla may become the next iPhone of cars. If that happens, even the smaller, mainstream players will get affected."

Darab Ali

(The Quint has reached out to Tata, Mahindra, and BYD for their response to Tesla's launch in India. This article will be updated as and when they respond. This story was originally published in March 2025. It has been updated to reflect details about Tesla's new showroom in Mumbai.)