Tesla (TSLA-US) has hit a wall in India. Six months after Elon Musk personally inaugurated the company’s first luxury showroom in Mumbai, sales have been dismal. According to Economic Times, Tesla sold just 157 vehicles by the end of November, barely 6.3% of its 2025 target of 2,500 units. The poor showing underscores the challenges of entering one of the world’s most price-sensitive auto markets.
Pricing Misstep and Tariff Barriers
Tesla’s Model Y, priced at $67,000 in India, costs nearly 12 times the country’s GDP per capita. Punitive tariffs of 70–100% on imported vehicles have turned Tesla’s mid-range EV into a luxury item.
Local analysts argue the positioning is awkward. As Autocar India editor Hormazd Sorabjee noted, wealthy buyers can opt for German EVs like the Mercedes-Benz EQA for less, while mass-market consumers gravitate toward Tata Motors’ Nexon EV, priced around $18,000. For India’s cost-conscious buyers, Tesla’s technological halo has little appeal against entrenched local brands.
Missed Policy Window
Tesla’s reluctance to commit to local manufacturing has also hurt. Earlier this year, the Modi government offered to slash import tariffs to 15% if foreign automakers invested in domestic factories. Tesla hesitated, choosing instead to import vehicles at full tariff rates.
Competitors seized the opening. Despite geopolitical tensions, BYD and other Chinese automakers sold a combined 60,000 EVs in India through November. Even luxury rivals Mercedes, BMW, and Audi managed 4,000 units. Tesla’s 157 sales pale in comparison.
Infrastructure Challenges
India’s charging infrastructure remains underdeveloped. In New Delhi, a city of 30 million, there are only 132 public charging stations, creating long queues and range anxiety. Tesla operates just two Supercharger stations nationwide, insufficient for meaningful adoption. Coupled with frequent power shortages, even affluent buyers hesitate to commit.
Investor Lessons
Tesla’s India setback offers a cautionary tale. While the government’s Self-Reliant India plan targets 30% EV penetration by 2030, current adoption is just 2.8%. Local brands like Tata and Mahindra dominate, holding 95% of market share.
Analyst Amit Kaushik of the Centre for Policy Studies noted that foreign automakers unwilling to localize production will inevitably struggle. For Tesla, the "high-priced import" model has failed.
What's Next for Tesla?
To succeed, Tesla may need to build a local factory and produce cheaper entry-level models, such as the rumored Model 2, to compete directly with Tata and BYD. Without such a pivot, India’s EV boom could bypass Tesla entirely, even as the government doubles down on electrification amid worsening air pollution.