Tesla's long-awaited entry into India has been marked by disappointing sales, raising questions about the electric vehicle maker's strategy in one of the world's fastest-growing auto markets.
Slow start despite high expectations
According to Bloomberg, since its launch in mid-July 2025, the company has received just over 600 orders, well below its internal projections. For comparison, Tesla delivered a similar number of vehicles globally every four hours during the first half of 2025.
The company's first shipment of 350 to 500 cars from its Shanghai plant is expected to arrive in early September 2025, with deliveries limited to Mumbai, Delhi, Pune, and Gurugram. These vehicles correspond to orders that have been fully paid for and are being distributed in the four cities where Tesla currently has a physical presence. While Tesla had originally aimed to utilize its full 2,500-car annual import quota in 2025, the slow start suggests it may fall short of that target.
High tariffs dampen market appeal
According to the report, high import tariffs have been a major obstacle. Tesla's entry-level Model Y costs over INR6 million (US$68,000) in India, pricing it far above the INR2.2 million segment where most EV sales occur. The company had hoped for tariff relief through US-India trade talks, but such negotiations have stalled amid geopolitical tensions. Tesla's reluctance to pursue aggressive local marketing—common among Indian automakers—has also limited awareness and demand.
Retail expansion continues amid challenges
Despite the slow start, Tesla has pressed ahead with retail expansion in India. On July 15, 2025, it opened its first "Experience Center" at Jio World Drive in Mumbai's Bandra Kurla Complex, a 4,000-square-foot showroom displaying the Model Y. A second outlet followed on August 11, 2025, at Delhi's Aerocity WorldMark 3 complex, near the international airport, with an 8,200-square-foot floor space. To support logistics and service operations, Tesla has also signed a five-year lease for a 24,565-square-foot warehouse in Kurla-West, Mumbai, effective June 1, 2025.
However, Tesla may face a new setback as India considers raising the goods and services tax (GST) on luxury EVs priced above US$46,000. A government tax panel has recommended lifting the rate from the current 5% to as high as 40%. If implemented, the policy would sharply increase costs for Tesla.
Article edited by Jerry Chen
