Tesla India plant unlikely amid global EV sales slump

Tesla CFO Vaibhav Taneja says that India is “a very hard market” and that the EV maker is “being very careful” about timing its entry.

Published On Apr 23, 2025 03:57:00 PM

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Tesla showroom and Tesla CFO Vaibhav Taneja inset

Tesla showroom used for representation only; Tesla CFO Vaibhav Taneja (inset).

While Tesla continues to work towards entering the Indian market, the brand remains cautious about the timing. CFO Vaibhav Taneja acknowledged the challenges of entering India during a discussion with analysts following Tesla’s Q1 2025 earnings, which showed a 20 percent drop in revenue and a 71 percent decline in net profit.

In its earnings call, Tesla stated that it will not invest in any new manufacturing lines until the brand nears 30 lakh vehicle sales per year. Given that Tesla sold 17,89,226 units in 2024, reaching the 30 lakh milestone appears challenging in the current global scenario. This makes any immediate announcement of production capacity expansion by Tesla in India unlikely.

India’s steep tariff regime and unclear EV policy make it a “hard market”
Musk to visit India later this year; new base variants may influence India strategy

Tesla India entry

Tesla trying to time India entry correctly; no timeline confirmed

According to Tesla CFO Taneja, the core challenge lies in India’s complex and steep tax regime. “Any car we send into India is subject to a 70 percent import tariff, plus an additional 30 percent luxury tax,” Taneja said, noting that this effectively makes Tesla vehicles 100 percent more expensive than in other markets. “This creates a lot of anxiety for customers,” he explained, “because they feel they’re paying too much for the car – and, importantly, that money isn’t coming to Tesla. It’s going to the local government.”

The Model Y was spied on test in India recently.

Taneja emphasised that India is “a very hard market” not just because of tariffs but also due to the overall import structure. He said Tesla is “being very careful” about timing its entry. “We’re trying to figure out when the right time is,” he said, adding that “we are working on it.”

India's EV policy still to be formalised

Tesla taking a wait-and-watch approach

Despite active engagement between Tesla and Indian policymakers over the past year, including discussions around potential investment and policy incentives, there has been no official confirmation of a timeline for market entry or local assembly plans. The Indian government has been working on a new electric vehicle policy that could reduce import duties in exchange for investment commitments. However, local manufacturing does not appear likely in the near term, and Tesla seems to be taking a wait-and-watch approach amid ongoing uncertainty around tariff terms.

Tesla has long-term interest in the Indian market

Despite the challenges, Taneja reiterated Tesla’s long-term interest in the country. “India is a great market to enter,” he said. “It has a large middle class – the segment we want to tap into. But the current structure creates tension, and we’re trying to work around those challenges.”

Tesla Model Y entry-level variant could influence India plans

Musk took to X to say he plans to visit India this year

Tesla has announced plans to introduce more affordable, entry-level variants of some of its popular models, like the Model Y SUV; the SUV was recently spied on test in India. Perhaps these more budget-friendly Teslas will be the ones to be introduced in the country. Further, last week, Elon Musk confirmed plans to visit India later this year, following a conversation with Prime Minister Narendra Modi on April 18, 2025.

Also see:

Tesla Model 3, Model Y homologation initiated in India

Tesla India showroom location finalised in Mumbai: Report

Tesla Model Y facelift with 719km range revealed