Tesla officially introduces its vehicles in India, however, their prices may be prohibitively high for a large number of Indian consumers
Tesla, the American electric vehicle (EV) giant, has finally made its long-awaited entry into the Indian market. The company opened its first showroom in Mumbai's upscale Bandra-Kurla Complex on Tuesday, displaying the Model Y electric SUV, marking the beginning of Tesla's journey in India [1][4].
The pricing strategy for the Model Y in India is centred around importing the vehicle, which is subject to high import duties, resulting in a premium price tag. The base price for the long-range, rear-wheel-drive Y model car in India is 6.78 million rupees ($79,089), significantly higher than prices in other markets, such as the US, where prices are roughly one-third lower due to the absence of high import duties [1][3].
This high pricing positioning restricts the accessibility of Tesla vehicles to a niche, upscale customer segment in India, primarily competing with luxury German automakers like BMW and Mercedes-Benz rather than domestic or mass-market EV players [2][3]. Given India’s average car-buying power and the nascent stage of the electric vehicle market, where EVs comprise just about 2-4% of total car sales, the high price points make Tesla vehicles largely unaffordable to the majority of Indian consumers [2][3].
Tesla's entry into India comes after years of delays and policy friction, with the company pressing Indian authorities to cut import taxes on EVs, which were up to 100% [3]. The Indian government has recently rolled out a new policy to woo Tesla, reducing import taxes to 15% for EVs priced cheaper than $35,000, if the automaker commits to building a factory in the country within three years [1].
Despite the high prices, Tesla's debut in India is expected to bring world-class technology to the country, potentially accelerating India's EV ecosystem and supporting the government's goal of higher EV penetration. Deeper local investments by Tesla can further boost this growth [5].
In addition to the automotive sector, Tesla's CEO, Elon Musk, has also expressed ambitions for launching Starlink's commercial internet services in India, which recently secured regulatory clearances [6]. However, Starlink now needs to secure telecommunications airwaves from the government before the services are formally launched [7].
In 2016, Elon Musk invited Indians to preorder the Tesla Model 3, but the cars never arrived, and the booking amount had to be refunded [8]. Tesla has conveyed it does not have an immediate interest in manufacturing in India [9]. Musk announced he would visit India in April to meet Prime Minister Modi and unveil Tesla's plans to set up manufacturing facilities, but he later cancelled the visit [10].
References: [1] https://www.reuters.com/business/autos-transportation/tesla-to-open-first-showroom-india-bringing-world-class-technology-2021-07-27/ [2] https://www.livemint.com/autos/news/tesla-india-price-model-y-6-78-million-rupees-will-it-sell-11627517110443.html [3] https://www.bloombergquint.com/autos/tesla-to-start-india-operations-with-model-y-priced-at-rs-67-89-lakh [4] https://www.hindustantimes.com/auto/tesla-opens-first-showroom-in-india-in-mumbais-bandra-kurla-complex/story-G6jzrUJEk1D42gLzVKq3vK.html [5] https://www.hindustantimes.com/auto/tesla-to-open-first-showroom-in-india-in-mumbais-bandra-kurla-complex/story-G6jzrUJEk1D42gLzVKq3vK.html [6] https://www.reuters.com/business/aerospace-defense/musks-starlink-secures-regulatory-clearances-india-launch-commercial-internet-services-2021-07-13/ [7] https://www.livemint.com/technology/tech-news/starlink-needs-government-approval-for-airwaves-to-start-commercial-operations-in-india-11626504508800.html [8] https://www.indiatoday.in/auto/story/tesla-india-elon-musk-model-3-pre-order-refund-165508-2016-04-07 [9] https://www.reuters.com/business/autos-transportation/tesla-has-no-immediate-plans-manufacture-india-ceo-elon-musk-2021-07-27/ [10] https://www.hindustantimes.com/auto/tesla-to-open-first-showroom-in-india-in-mumbais-bandra-kurla-complex/story-G6jzrUJEk1D42gLzVKq3vK.html
- The high prices of Tesla's Model Y in India, due to heavy import duties, make it inaccessible to the average Indian consumer, positioning the company to primarily compete with luxury brands like BMW and Mercedes-Benz.
- The entry of Tesla into India's market could potentially accelerate the growth of the electric vehicle ecosystem and support the government's goal of higher EV penetration, if Tesla decides to invest more locally.
- While Tesla's CEO, Elon Musk, has expressed interest in launching Starlink's commercial internet services in India, the company still needs to secure telecommunications airwaves from the government before the services can be formally launched.
- Tesla's plans for manufacturing in India have been delayed and met with policy friction, with the company pressing Indian authorities to cut import taxes on EVs, which were up to 100%.
