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A tough sell for Elon Musk? Tesla has a cold start in India
Tesla's India debut has faced significant hurdles, with roughly a third of imported Model Y SUVs remaining unsold. High import duties inflate prices, making the premium EVs uncompetitive against locally assembled rivals and feature-rich alternatives. Despite strong brand appeal, Tesla struggles to convert interest into sales in India's price-sensitive market.
When Tesla Inc. finally entered India in mid-2025, expectations were high. The Elon Musk-led electric vehicle maker had long teased the prospect of tapping the world's third-largest passenger-vehicle market, once even floating the idea of building a local manufacturing plant. Yet barely less than a year into its India journey, Tesla's debut has exposed the challenges of selling premium imported EVs in a price-sensitive but fast-evolving market.
According to a Bloomberg report, Tesla is struggling to sell roughly a third of the initial batch of vehicles it imported into India last year. Sluggish demand left around 100 Model Y sport utility vehicles unsold nearly four months after the company shipped about 300 units into the country, people familiar with the matter told Bloomberg. To reduce inventory, Tesla is offering discounts of up to Rs 2,00,000 on select Model Y variants, though these offers are being made quietly to individual customers rather than through a formal nationwide promotion.
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This slow start underlines the gap between Tesla's global brand power and the realities of the Indian auto market.
Also Read: Tesla's India letdown spurs discounts on unsold Model Y SUVs
Tesla's high prices, low conversions
Tesla's India entry was built around a single product: the Model Y. The SUV is currently sold in India at a starting price of nearly $70,000, making it one of the most expensive electric vehicles in its segment. Bloomberg reported earlier that Tesla had received about 600 bookings for the Model Y in India, but a significant portion of those orders had yet to convert into actual deliveries.
Official registration data highlights this disconnect. Tesla registered only 227 vehicles in India during all of 2025, as per Bloomberg. People familiar with the matter told Bloomberg that many customers who placed early deposits are now hesitant to complete purchases, particularly for the lower-priced, shorter-range Model Y variant. While there has been interest in the more expensive long-range version, deliveries of that model have also moved slower than expected, contributing further to inventory build-up.
Also Read: Tesla opens first full-scale experience centre in India
The drag of duties and market structure for Tesla
A core challenge for Tesla in India is pricing. Imported cars face customs duties that can go as high as 110%, significantly inflating sticker prices. Tesla was relying heavily on brand appeal to overcome these costs, an approach that has so far yielded limited success.
India's EV buyers remain highly value-conscious, even in the premium segment. While Tesla hoped to create aspiration-driven demand, the price gap between the Model Y and competing electric SUVs has pushed many buyers to consider alternatives that offer either lower prices or more features.
Tesla's difficulties in India also come at a time of weakening global momentum. Bloomberg reported that the company's worldwide sales declined in 2025 for a second straight year, allowing China's BYD Co. to overtake Tesla as the world's largest EV seller. This broader slowdown has reduced Tesla's flexibility to absorb losses or aggressively subsidize new markets like India.
Also Read: Tesla aims to develop EV ecosystem in India to boost long-term sales
Better-positioned rivals of Tesla
Tesla's underwhelming start stands in sharp contrast to the performance of some global competitors in India. BMW AG's Indian unit recorded nearly 200% growth in EV sales last year, selling around 3,700 vehicles, according to BMW India head Hardeep Singh Brar as reported by Bloomberg. A key driver was the locally assembled iX1, which benefits from significantly lower costs compared to fully imported models.
China's BYD has also made steady gains. Bloomberg noted that BYD's India registrations rose 88% last year to over 5,400 cars, supported by a broader range of price points and partnerships with local players. Models such as the BYD Sealion 7, which offers more features at a lower starting price than the Model Y, have attracted customers who might otherwise have considered Tesla.
Even buyers who test-drive Tesla vehicles often walk away. Bloomberg reported that some customers choose BMW's entry-level iX1 due to its lower price, while others prefer BYD models that offer richer feature sets, exposing Tesla's thin product portfolio in India.
Tesla's limited visibility and infrastructure constraints
Beyond pricing, Tesla's limited physical presence has hampered brand traction. With only a handful of showrooms and no local manufacturing, Tesla lacks the widespread visibility enjoyed by established luxury carmakers. Service infrastructure remains sparse, increasing concerns among buyers about maintenance, repairs and long-term ownership.
Tesla hired Sharad Agarwal, former head of Lamborghini India, in November to lead its local operations and strengthen its appeal to luxury buyers. However, rebuilding confidence in a market where after-sales support plays a major role in purchase decisions will take time. Tesla currently has no plans to manufacture vehicles in India and is focused solely on selling imported cars through showrooms, keeping costs high and volumes constrained.
A market moving faster than Tesla
Tesla's slow traction is particularly striking given the rapid acceleration of India's broader EV market. Electric vehicle retail sales rose 16.37% year-on-year to 2.27 million units in 2025, driven by a 77% surge in electric passenger car sales, according to data released by the Federation of Automobile Dealers Associations (FADA).
Electric car sales climbed to 176,817 units in 2025 from 99,975 units a year earlier, fueled largely by mass-market manufacturers such as Tata Motors and JSW MG Motor India. Competitive pricing, improving product quality, state-level incentives and lower running costs compared to petrol and diesel vehicles are pushing EVs into the mainstream.
This expanding base creates long-term potential for premium brands, but it also raises expectations around affordability, infrastructure and localised offerings, areas where Tesla is currently lagging.
Tesla building an ecosystem, not just selling cars
Recognising these challenges, Tesla is attempting to lay groundwork for long-term growth. ET reported in November that Tesla is working on developing an EV ecosystem in India to support adoption. The company plans to install charging points at customers' homes, destinations such as malls and hotels, and superchargers in major cities.
“We always build our infrastructure around the lifestyle of our customers, where they eat, where they work, where they go for staycations,” Tesla India General Manager Sharad Agarwal had told ET, outlining a roadmap aimed at easing range anxiety and improving ownership experience.
Agarwal also told Reuters in November that Tesla expects Indian consumers to recover roughly one-third of the Model Y's 6 million rupee price over four to five years through savings on fuel and maintenance. This cost-of-ownership argument mirrors Tesla's strategy in other high-cost markets, though its effectiveness in India remains uncertain yet.
Hope floats for Tesla
Bloomberg has previously reported that Tesla's India plans hinge partly on ongoing trade negotiations that could reduce import duties. Discussions around a US-India bilateral trade agreement have so far dragged on, delaying any relief. An India-Europe free trade agreement, if finalised, could also allow Tesla to import vehicles from its German factory at lower tariff rates.
Until such changes materialize, Tesla's pricing disadvantage is likely to persist, limiting volumes and forcing the company to rely on discounts and selective incentives to move inventory.
However, Tesla's initial struggles in India do not necessarily signal long-term failure, but they highlight the limits of brand-led entry in a complex, cost-sensitive market. The company has entered India at a time when EV adoption is accelerating, yet competition is intensifying and customer expectations are evolving rapidly. For now, Tesla remains on the sidelines of India's EV boom, present but not yet influential. Whether it can convert early interest into sustained demand will depend on its ability to localise strategy, expand infrastructure, navigate trade barriers and adapt its product mix to a market that is moving faster than Tesla.Add as a Reliable and Trusted News Source Add Now!
Source: EconomicTimes
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