In April 2016, Elon Musk invited Indians to place orders for the upcoming Tesla Model 3. Vishal Gondal, a fan of Musk and the CEO of the health-tech startup GOQii in Mumbai, was among the first to sign up, paying a $1,000 deposit. However, even after eight years, the car has yet to arrive.
Tesla’s Delays and India’s Unique Market Challenges
Tesla initially promised to bring its cars to India, but concerns about high taxes making the cars too expensive and challenges in building a factory in India have delayed its plans. While other automakers have launched electric vehicles (EVs) in India, Tesla has not followed through. Gondal, frustrated with the delay, eventually purchased an electric SUV from Audi and received his $1,000 refund in January 2023, thanks to a friend who helped him contact a Tesla sales manager in India.
India’s Auto Market: A Tough Nut to Crack
India, the third-largest auto market in the world after China and the United States, presents unique challenges. The average price of a car in India in 2023 was $14,000, compared to $47,000 in the U.S. A Tesla Model 3, which costs around $40,000 in the U.S., is considered a luxury car in India, and buyers would expect excellent after-sales service.
Tesla’s Struggles to Compete with Established Luxury Brands
Gondal believes Tesla is a great tech company but lacks the expertise to sell luxury cars. Other luxury carmakers in India have already started selling EVs. Hemant Suthar, a design studio director in Mumbai who also preordered a Tesla in 2016, eventually got his money back in 2023. He expressed doubts about Tesla’s ability to compete with the more luxurious EVs now available in India.
India’s Efforts to Attract Automakers Like Tesla
To attract automakers like Tesla while protecting domestic companies like Mahindra and Maruti Suzuki, India reduced import duties for EVs priced below $35,000 from 70%-100% to 15% in March 2024, provided the automaker commits to building a factory in India within three years.
Elon Musk’s Concerns About Indian Market Viability
Despite the initial excitement, Elon Musk expressed concerns in 2019 that high import duties would make Teslas too expensive in India. Many expected Musk to announce plans for a factory in India in April 2024, but he canceled the trip, citing “very heavy Tesla obligations.”
The Changing EV Landscape and Growing Competition
The EV market has evolved significantly in India and globally over the past few years. Tesla, which once had a first-mover advantage, now faces stiff competition, particularly from Chinese EV makers like BYD, which is rapidly expanding overseas. Tesla’s global sales have slowed, and its new product, the Cybertruck, lacks a substantial market outside the U.S.
India’s Growing, Yet Challenging, EV Market
India’s auto market is dominated by Maruti Suzuki, followed by Hyundai Motors and Tata Motors. While EV sales in India doubled in 2023, they still account for just 2% of total car sales. Tata Motors holds the largest share of the Indian EV market, with Mahindra & Mahindra and BYD also gaining ground.
BYD’s Rise in India’s EV Market
BYD has been in India since 2008, initially making batteries. By 2023, it was one of the top five EV brands in India, despite offering only two models. It launched the BYD Seal in March 2024.
Tesla’s Challenges in Meeting Indian Consumers’ Expectations
Many Indians remain skeptical about EVs. Ishan Raghav, the managing editor of Indian car magazine autoX, said that to appeal to the mass market, Tesla would need to price its cars around $30,000. The only way to achieve this, he added, is to build the cars in India.
The Future of Tesla in India Remains Uncertain
While India does not restrict Chinese EV imports, tensions between India and China have created additional challenges. Even if Tesla agrees to build a factory in India, its imported cars would still be priced similarly to luxury cars from established players like Mercedes Benz and Audi, which have a long-standing presence in India and well-established dealership networks.
Dealerships and Charging Infrastructure: Key to Success
In the U.S., Tesla sells cars directly to customers, but in India, dealerships play a crucial role in providing a luxury experience. Tesla would also need to build a charging network in India, given the relatively small number of EVs currently on the roads.
Tesla’s Future Plans: Affordable Models on the Horizon?
In a July earnings call, Musk said Tesla is increasing capacity at its factories and that its affordable car—a small model expected to cost around $25,000—was “on track” for delivery in the first half of 2025. However, Tesla’s plans for India remain uncertain.
Indian Government Still in the Dark About Tesla’s Intentions
Rajesh Kumar Singh, the head of India’s agency for promoting industrial growth, mentioned in a TV interview that the Tesla executive with whom Indian officials had been in talks “got fired,” leaving India uncertain about Tesla’s intentions.
“We really don’t know,” Singh said.
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