Tesla, one of the world’s best known electric vehicle manufacturers, has confirmed plans to invest $1 billion. In 2023, the company expects to source almost twice as many components, up to $1.9 billion. This expansion comes nearly nine years after CEO Elon Musk first hinted at the company’s intentions to enter the Indian market. Discussions between Musk and Indian Prime Minister Narendra Modi, along with senior officials, have fueled optimism surrounding Tesla’s future in the country.
The Indian central government has vigorously lobbied to try to get Tesla to build a factory there, too. This new initiative aims to capitalize on India’s position as the fourth-largest automotive market. With nearly 6 million vehicles produced annually, India is an automotive manufacturing powerhouse. The government’s drive shows a clear commitment to creating production of EVs in the UK and freeing up the dependency on imports.
During discussions regarding Tesla’s plans, H.D. Kumaraswamy, India’s Minister for Heavy Industries, highlighted the importance of Tesla’s presence in India. He reiterated the company’s promise to re-define what the automotive industry looks like in the country. It’s clear they are serious about competing with other states to push higher adoption of electric vehicles.
Tesla sure is making a move to India though! This month, the company is set to open its second retail store in Delhi, matched by its initiatives in local component sourcing. The firm operates a large, 4000 square foot innovation center to serve their Indian clients. Here, they can easily specify the top-selling Model Y, offered in rear-wheel drive (RWD) and long-range RWD versions. Customers in India can reserve their Model Y with a fully refundable deposit of ₹2,199 (around $26).
The Model Y RWD with the cheapest battery available is listed at ₹59,89,000, or about $68,000. If you want the long-range RWD version, it’s priced at ₹67,89,000, or around $79,000. Tesla further strengthens its product offerings in the Indian market by including a full self-driving add-on. To avail this feature, one has to pay additional ₹600,000 (approximately $7,000).
While Tesla has made ambitious plans in India, it has had failures in its home market. The company reported a 13% year-over-year decline in U.S. sales during the first half of the year, totaling 255,000 vehicles. That led to second quarter global sales falling by 13% to 443,956 units. This drop signals the tough market climate and increasing competition.
The resignation of Prashanth Menon, who was overseeing Tesla’s operations in India, in May has raised questions about the company’s strategic direction in the region. Beyond the short-term challenges, this leadership transition poses unique opportunities to accelerate transformative change at Tesla. The effort will help the company bolster further its position in the rapidly evolving Indian auto market.
Looking forward, Tesla intends to bring vehicles in from its plant in Berlin once an India-European Union Free-Trade agreement is negotiated. This possible deal would enable Tesla to export cars from European markets with less punitive taxation policies. This initiative would greatly improve Tesla’s competitive standing in India.
In 2024, New Delhi’s decision to cut import taxes on electric vehicles will facilitate Tesla’s efforts to expand its presence. The Indian government is slashing import duties on electric vehicles (EVs). This step not only opens the door for foreign investment, but it leads to the adoption of greener transportation alternatives.