Tesla Enters Indian Market with Pricey $70,000 Model Y

Tesla has officially opened its first showroom in India, setting up shop in Mumbai. The launch was marked by a formal inauguration led by Maharashtra Chief Minister Devendra Fadnavis and welcomed a select group of visitors. This move comes after years of interest from Elon Musk’s company, which until now had stayed away due to India’s stiff import taxes on electric vehicles.

Musk has previously described India as a country with “more promise than any large nation,” but also criticized its high duties on imports. Tesla repeatedly pushed Indian authorities to lower these taxes so it could test the market before making long-term commitments. Until recently, India stood firm, asking Tesla and other global automakers to build locally before offering any incentives.

The Import Tax

In a significant policy shift, New Delhi announced a new EV policy in March, lowering import duties to 15% from a range of 70 to 100%. The catch: the EV must be priced under $35,000, and the automaker must commit to building a factory in India within three years. This was seen as a way to balance India’s push for local manufacturing with Tesla’s request to bring in cars first.

Despite this new policy, Tesla has not yet confirmed any plans for a local plant. Instead, Indian media reports suggest the company will begin selling cars imported from its factory in Shanghai, with deliveries expected to start in late August. This means Tesla’s vehicles will not qualify for the lower import tax and will remain luxury offerings for the Indian market.

India’s EV industry is growing but still makes up a small portion of the overall car market. Total EV sales in 2024 were around 100,000 vehicles, less than 3 percent of all passenger vehicle sales. With a price point far above average, Tesla is unlikely to target the mass market for now.

Indian Analysts said Tesla’s pricing places it in competition with luxury brands rather than local EV makers. They expects initial monthly sales to hover between 500 to 700 units before tapering down to 200 to 300. Tesla is not aiming for high volumes in the short term and will focus more on presence than numbers, they added.

The timing of Tesla’s India launch also reflects larger challenges for the company globally. Its sales have softened in the US and Europe, with increased competition from cheaper Chinese brands like BYD. The global EV market has become crowded, and Tesla is no longer the only strong player.

Trade Talks & Strategic Timing

Amid these developments, India and the United States are engaged in trade negotiations, which include discussions on automobile tariffs. In February, Elon Musk had a private meeting with Prime Minister Narendra Modi in Washington. While no major announcements followed, it was widely seen as a step toward clearing the path for Tesla’s India plans.

For now, Tesla’s move into India is more about planting a flag than scaling fast. The showroom in Mumbai marks a start, but the real test will be whether Tesla follows up with investment in local production. Without that, the cars will remain out of reach for most Indian buyers, and Tesla’s role will be limited to the premium end of a young and growing market.