Tesla's Launch in India Hits a Hurdle with High Import Tariffs driving up Vehicle Costs
Tesla's Slow Start in India's EV Market
Tesla, the renowned electric vehicle (EV) manufacturer, has made its entrance into India by installing Superchargers in Mumbai and Delhi. However, the company's initial foray into the country has been met with challenges, as the demand for its premium EVs is far below expectations.
The first batch of Tesla cars is expected to arrive in India in early September, with deliveries initially limited to Mumbai, Delhi, Pune, and Gurugram. Despite the limited rollout, the company is facing an uphill climb in India's developing EV market, which is dominated by more affordable alternatives and is particularly price-sensitive.
The high import duty on foreign vehicles is a significant barrier for Tesla in the Indian market. The import price of Teslas in India is currently increased due to high customs duties and taxes, including a 100% import duty on fully imported electric vehicles, plus additional Goods and Services Tax (GST) and cess, which together significantly raise the cost. As a result, the average price of an EV in India is around ₹22 lakh (C$35,000/US$25,000), making Tesla's vehicles nearly triple the price.
The sluggish sales are attributed to the high cost of Tesla's vehicles in India, with the Model Y priced at more than ₹60 lakh (around C$94,000/US$70,000). Despite this, Tesla is treating India as a long-term play rather than a short-term sales driver.
In an effort to encourage sales, Tesla is offering consumers the opportunity to get three months of Full Self-Driving (FSD) through a referral link. Additionally, the company plans to open a third experience center in South India next year.
Despite these efforts, Tesla's entry into India has started slowly, with only over 600 bookings since the mid-July launch, significantly below the internal target of 2,500 vehicles for 2025. The company initially planned to fully utilize its annual import quota of 2,500 vehicles, but now expects to ship only 350 to 500 units this year due to low demand.
The number of luxury EVs sold in India in Tesla's price bracket during the first half of 2025 was approximately 2,800 units. This indicates that there is a market for premium EVs in India, but Tesla will need to find a way to make its vehicles more affordable if it wants to capture a significant share of the market.
According to a report by Bloomberg, the demand for Tesla's vehicles in India is far below expectations. As the company continues to navigate the challenges of the Indian market, it remains to be seen how it will fare in the long term.
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