Tesla launches in India with small bet on potentially massive market
- - - Tesla launches in India with small bet on potentially massive market
Pras SubramanianJuly 15, 2025 at 11:22 AM
Tesla (TSLA) officially launched in India on Tuesday, making a small bet on a country with massive growth potential.
Tesla's first showroom, dubbed a "Tesla Experience Center," opened in a fashionable mall in the cosmopolitan city of Mumbai, India's largest metropolis with nearly 13 million residents and more than 23 million including the greater region.
Tesla's only car on offer is the refreshed Model Y, which will be imported from China, where Tesla builds models with right-hand drive. The cost will be steep, however, due to India's strict import tariffs of nearly 100%. Per Tesla's India website, the Model Y rear-wheel drive will start at 6.1 million rupees (or 61 lakhs, as they say in India), or around $70,000. The equivalent Model Y in the US starts at $44,900 before taxes and fees.
Tesla's India deliveries will begin later in the third quarter.
Media personnel look at Tesla's Model Y car at India's first Tesla showroom, newly opened in Mumbai, on July 15. (AP Photo/Rafiq Maqbool) ()
Not surprisingly, Tesla is not expected to sell many EVs in the country with such a high starting price and where the average annual income is around $4,000. And while India is the world’s third-largest car market by volume, EVs account for only 4% of overall sales.
"We don't expect Tesla to play the volume game right away given the price tag," Counterpoint senior analyst Soumen Mandal told the AFP.
But growth in India could be explosive. Per the Organisation for Economic Co-operation and Development (OECD), India's population will reach nearly 1.7 trillion people by 2050, whereas China is expected to see its population decline. Much of India's current population still lives rurally, with the country experiencing a low labor participation rate; those percentages are expected to flip, with a growing middle class on the way.
People Research on India's Consumer Economy (PRICE) projects that by 2030, India will add about 75 million middle-class and 25 million rich households, with the total share of these segments reaching 56%.
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Tesla South East Asia director Isabelle Fan, third from right, poses with Tesla's India team at the newly opened showroom in Mumbai on July 15. (AP Photo/Rafiq Maqbool) ()
The demographics point to a strong growth market, but it isn't that simple.
India's strong preference for import tariffs, which have been in place for over 70 years in various capacities, is a means to boost domestic industrial production and make foreign companies invest in India. President Trump's tariff war isn't helping matters, but the two countries are negotiating to make a deal, with India's trade delegation currently in Washington.
As for Tesla, CEO Elon Musk has toyed with building a plant in India for both local production and export, but a slowing EV market has the CEO recently betting on AI and autonomous technology.
But investing in R&D to ease tariffs could be a way into India without having to build a plant.
"In the future we wish to see R&D and manufacturing done in India, and I am sure at an appropriate stage Tesla will think about it," Devendra Fadnavis, chief minister of Maharashtra, the second-most-populous state in India, said per Reuters.
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Elon Musk, CEO of SpaceX, Tesla, and X and the former head of the Department of Government Efficiency (DOGE), meets with Indian Prime Minister Narendra Modi at Blair House in Washington D.C., on Feb. 13. (Press Information Bureau/Handout/Anadolu via Getty Images) (Anadolu via Getty Images)
The Musk factor is also a boon for Tesla, though it is complicated when it comes to India. Though he is popular as a businessman, Musks' X platform is mired in a legal battle over censorship in the country.
Nevertheless, Musk held a one-on-one meeting with Indian Prime Minister Narendra Modi in Washington earlier this year when Indian business leaders visited the White House, indicating the two may have a rapport. Modi has made no secret of his desire to reform Indian policies to boost foreign investment.
Even domestic Indian automakers are welcoming the new competition.
"Welcome to India, Elon Musk and Tesla. One of the world's largest EV opportunities just got more exciting," Anand Mahindra, fellow billionaire and chairman of the Mahindra Group (M&M.BO) said earlier Tuesday on X. "Competition drives innovation, and there's plenty of road ahead. Looking forward to seeing you at the charging station."
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Pras Subramanian is the lead auto reporter for Yahoo Finance. You can follow him on X and on Instagram.
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