Struggles with Initial Launch in India for Tesla Due to High Import Taxes Escalating Car Prices

Tesla, the American electric vehicle (EV) giant, has made its grand entry into India's burgeoning EV market. However, the company's initial foray into the price-sensitive Indian market has been met with a muted response due to the high cost of their vehicles.

The average price of an electric vehicle in India stands at around ₹22 lakh. In contrast, Tesla's entry-level offering, the Model Y, carries a sticker price of more than ₹60 lakh, nearly triple the average price. This high cost is largely due to India's near-100% import duty on foreign vehicles, which effectively doubles the cost of Tesla's Shanghai-built cars.

Despite the initial challenges, Tesla is treating India as a long-term play rather than a short-term sales driver. The company has installed Superchargers in Mumbai and Delhi, and plans to open a third experience center in South India next year. Deliveries will be limited to four cities in India: Mumbai, Delhi, Pune, and Gurugram.

The struggle for Tesla in the Indian market can be attributed to the dominance of more affordable EV alternatives. The number of units sold in India's luxury EV market in Tesla's price bracket during the first half of 2025 was approximately 2,800.

Tesla initially planned to fully utilize its annual import quota of 2,500 vehicles, but with demand far below expectations, they now expect to ship only 350 to 500 units this year. The first batch of Tesla cars is expected to arrive from China in early September 2021.

The Directorate General of Trade Remedies (DGTR) in India has granted approval or consent for a reduction in import duties for Tesla electric vehicles. This could potentially lower the cost of Tesla cars in India, making them more accessible to consumers.

Consumers in India's developing EV marketplace are cost-conscious and the infrastructure for charging stations is still catching up, particularly outside major cities. Despite these challenges, Tesla remains optimistic about its long-term prospects in India. The information about Tesla's sales and plans comes from Bloomberg.