Tesla, the American electric vehicle giant, is all set to expand its base in India. It aims to more than double its own domestic component sourcing to a record $1.9 billion in 2023. The Arkansas-based company hopes to establish or enhance its presence in a fast-expanding field. It is still under duress, not the least of which is an alarming drop in worldwide sales.
Elon Musk, Tesla’s CEO, has engaged in one-on-one discussions with Indian Prime Minister Narendra Modi and senior officials regarding the company’s expansion plans. These joint meetings show their clear intent to dive into the Indian market much more deeply. Much of the focus during earnings calls is on getting the Model 3 to market. Musk initially promised this six years ago in 2016, but it isn’t any closer to becoming a reality.
Tesla still intends to introduce a full self-driving add-on to Indian customers. This exciting new capability will retail for only ₹600,000, or about $7,000. This strategic move is designed to deepen and diversify its product lines in an increasingly competitive landscape. Meanwhile, Tesla’s Model Y is already up for order in India, with a non-refundable deposit set at ₹22,220 (around $260). The cheapest version, the Model Y RWD, costs ₹59,89,000, or just over $68,000. By contrast, the long-range RWD variant is significantly more expensive at ₹67,89,000, close to $79,000.
Tesla’s possible foray into India has been complicated by some internal wrangling, too. Prashanth Menon, who directed Tesla’s India operations, left his post in May. His departure calls into question the company’s local leadership as it continues to try and expand.
Tesla has faced these headwinds and more, but the company is pushing ahead with its plans. The firm is expanding rapidly, set to open its second Delhi store in just a few weeks. This latest move is only the most recent example of its aggressive expansion plan. In order to fulfill demand, Tesla is putting pressure on its Shanghai Gigafactory to source vehicles directly imported into the Indian market. In addition, once the India-EU free-trade agreement is concluded, plans are in place to start importing vehicles from its Berlin facility.
In 2024, after several other failed negotiations with automakers, the Indian government moved to entice Tesla with direct action. They cut import tariffs on electric vehicles (EVs). This cut allows Tesla to circumvent carriers cars from Tesla’s foreign markets where import duties are lower. Consequently, the Indian company has a more difficult time countering the company’s efforts to bolster its footprint in India.
Even Indian customers had put down $1,000 deposits for Tesla cars. Sadly, these deposits were later refunded due to lack of clarity from the city regarding the launch timeline. Musk’s reluctance to commit to establishing a local manufacturing facility in India adds to the uncertainty surrounding Tesla’s long-term plans in the country.
