Tesla not interested in manufacturing in India, minister says

Elon Musk's Tesla is said not to be interested in manufacturing in India, which rolled out a lucrative electric vehicle policy last year to attract global auto giants to one of the biggest car markets.

“Tesla only wants to open showrooms and sell imported cars,” said Heavy Industries Minister Kumaraswamy on Monday. The EV giant is unlikely to manufacture vehicles in the country anytime soon, he said.

Kumaraswamy also said India will soon invite applications under its electric vehicle (EV) manufacturing policy. The minister also said Europe’s Mercedes Benz, and Skoda-Volkswagen (VW), South Korean Hyundai, and Kia, have shown interest to manufacture EVs in India.


Speaking to journalists, he said the application window for the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) will open soon. After that, the government will start accepting formal applications.

Also Read: India to open flagship EV making policy to lure global giants

The government has announced a scheme that includes significant import tax cuts for foreign automakers that commit to investing in manufacturing electric cars in the country. Under a rewamped scheme, companies will be allowed to import a limited number of electric cars at a lower import duty of 15% versus the current 70% duty if they commit to investing $486 million to build EVs in the country, the Ministry of Heavy Industries said in a statement.

Meanwhile, in February, U.S. President Donald Trump said he believes any plans Tesla might have to open a factory in India would be "very unfair."

Tesla had recently finalised some showroom space in India and posted more than two dozen jobs, signalling it is getting closer to a launch.

Tesla has been mulling an India entry for the past several years and Musk has spoken against India’s high import duties, calling them a major barrier to Tesla’s expansion in the country.

Tesla’s gigafactories could boost India’s manufacturing and tech sectors by producing EVs, batteries and charging solutions locally. But would they go all in? Tesla also has to be accepted first, and that comes with some challenges. Their direct sales model may need to be adjusted for India’s dealer-centric market.

Aftersales service, a critical factor, has to be robust. Then there is pricing — India is price-sensitive, with the bulk of the passenger vehicle market below Rs 20 lakh. The cheapest Model 3 retails for $42,490 in the US (around Rs 37 lakh), placing it firmly in the luxury segment in India, even before duties come into play.

Initially, at least, these cars will likely be imported from Germany, adding a similar amount to the sticker price in duties, unless US President Donald Trump arm-twists India into cutting tariffs. That limits their market Rajeev Chaba, CEO emeritus of JSW MG Motor India, the India unit of Morris Garages, believes price point will be a challenge for Tesla.

Musk, in January, hinted at launching more affordable models in the first half of 2025. A $24,000 car, colloquially called Model 2, has been speculated for years, but that may not happen if news trickling out of China is to be believed, where Tesla is trying to reignite demand with a cheaper, stripped-down version of Model Y instead of a whole new car.

If Tesla wants to have more than a token presence in India, it would need to have better pricing, and value-driven offerings, than even China. “I think India is ready for more players, especially as EV penetration continues to grow.

Also, India’s EV penetration is still low, with electric passenger vehicle sales accounting for less than 3% of total sales. However, sales have grown substantially, from 5,000 units in 2020 to over 113,000 in 2024. It is this momentum Tesla could tap, especially in the premium segment, Ravi Bhatia, president of automotive consultancy Jato Dynamics earlier told ET.