Tesla's Introduction in India Faces Delays Due to High Import Taxes Pushing Prices Beyond Affordability

Tesla Faces Challenges in India's Price-Sensitive Market

Tesla's entry into India has been met with a muted response, highlighting the difficulties in selling premium electric vehicles in a market dominated by more affordable alternatives. The high cost of the Model Y, Tesla's entry-level offering in India, is largely due to India's near-100% import duty on foreign vehicles, which effectively doubles the cost of Tesla's Shanghai-built cars.

The comparatively low number of Tesla bookings in India is mainly due to very high import tariffs, reaching up to 110%, making Tesla cars like the Model Y very expensive (around €58,400). This is nearly triple the average price of an electric vehicle in India, which is around ₹22 lakh (C$35,000/US$25,000). The Model Y, therefore, has a sticker price of more than ₹60 lakh (around C$94,000/US$70,000).

Despite these 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 centre in South India next year. Initially, deliveries of Tesla cars will be limited to Mumbai, Delhi, Pune, and Gurugram, with the first batch of cars expected to arrive from China in early September.

India's luxury electric vehicle market remains small, with only about 2,800 units sold in Tesla's price bracket during the first half of 2025. Tesla initially planned to fully utilize its annual import quota of 2,500 vehicles, but now expects to ship only 350 to 500 units this year.

Despite the slow start, the struggle of Tesla in India is being closely watched by industry analysts. Bloomberg has reported on the challenges faced by the company in the country. Consumers in India are cost-conscious and with limited charging infrastructure outside major cities, premium models face an uphill climb.

However, with the Indian government's push towards electrification and the growing awareness about climate change, there is potential for the electric vehicle market to grow in India. Tesla's long-term strategy in the country could pay off in the future, as the market matures and becomes more accepting of premium electric vehicles.

Tesla's Introduction in India Faces Delays Due to High Import Taxes Pushing Prices Beyond Affordability