After almost a decade of speculation, failed talks, and obscure tweets, Tesla is now poised to enter India. The electric vehicle (EV) giant is set to establish a manufacturing presence in the world’s third-largest auto market, marking a significant milestone in its global expansion strategy.
It has been a challenging yet informative journey here, and I believe it conveys as much about India’s evolving industrial policy as it does about Tesla’s playbook for global expansion.
A Delayed Dream
The year 2015 saw Elon Musk’s initial hints about Tesla’s India venture. Recurrent announcements, Twitter pledges and reports of test vehicles being sent into the country have followed. Yet each time, progress stalled.
The sticking point? India’s import duties. Fully imported vehicles in the country can be taxed up to 100%, and Tesla, who is known for its aggressive lobbying in foreign markets, sought tariff reductions before committing to local investment.
In India, Tesla was required to manufacture its products within the country if it wanted to gain market access. It was a standoff until now.
According to recent reports, Tesla has agreed to build a factory in India with the capacity to produce 500,000 EVs annually, with an entry-level car priced at around $20,000. The company is also exploring the possibility of setting up a battery storage factory under its “Powerwall” division.
EV policies in India have become more flexible. Reports suggest that the government is developing a new EV policy that could result in lower import duties for manufacturers that commit to local production within statutory timeframes. Tesla’s situation coincides with this, allowing for some time to assess demand before taking on the entire responsibility.
Second, Tesla needs India. Despite the ongoing geopolitical tensions and growing competition from Chinese EV manufacturers like BYD, the company is now looking to expand beyond China. Despite the lack of progress in EV infrastructure, India is a strategic option due to its growing middle class and push for green mobility.
And lastly, it’s about timing. India has been actively pursuing global producers through its “Make in India” and “Atmanirbhar Bharat” (self-reliant India) initiatives. The entry of Tesla is a narrative tool and an economic tool.
Welcome, But Overdue
Although it’s long overdue, Tesla’s arrival in India is a thrilling prospect. If you think of a company that values disruption and rapidity, nine years is a lifetime. Tesla’s delay issues were not within their control, but it was evident that they underestimated India’s policy priorities. This is not a market where you can force your way in; it’s about adhering to long-term national interests.
In any case, the decision is advantageous for both parties. In a major emerging market, Tesla gains entry to its platform and India adds tens of thousands more jobs and boosts the company’s electric vehicle (EV) ambitions.
But execution will be key. India’s EV infrastructure, which includes charging stations and battery supply chains, is still in its early stages. Pricing will also matter. Even a $20,000 Tesla may feel out of reach for the average Indian consumer. The company will need to tailor its approach if it wants to scale.
What This Means Going Forward
Tesla’s India plans signal a broader shift in how automakers are viewing the subcontinent. India is now a market to be taken seriously both for its domestic potential and its manufacturing capacity.
