After years of anticipation, Tesla may finally be set to enter the Indian market. The renowned American electric vehicle (EV) manufacturer has initiated recruitment efforts for various positions in Delhi and Mumbai, signaling its intent to establish a presence in these major cities. Additionally, reports suggest that Tesla is actively seeking prime locations for showrooms in both metropolitan areas. This move comes as India, one of Asia’s largest economies, presents an intriguing growth opportunity amid global EV sales declines and intensifying competition from Chinese manufacturers.

India’s burgeoning EV sector offers significant potential, yet it poses unique challenges. Tata Motors currently dominates the country's EV market with over 60% market share, followed by MG Motors at 22%, and Mahindra & Mahindra. These local players offer vehicles priced significantly lower than Tesla’s base model, which starts around $40,000. Consequently, Tesla would likely be perceived as a luxury brand, competing against high-end EVs from Hyundai, BMW, and Mercedes. Moreover, adapting Tesla’s existing models to suit India’s road conditions—characterized by low ground clearance—could prove costly and complex. Industry experts question whether Tesla will undertake such modifications solely for this developing market.

Despite these hurdles, India’s government appears committed to fostering the EV industry. The country aims to electrify 30% of private cars, 70% of commercial vehicles, 40% of buses, and 80% of two- and three-wheelers by 2030. Provincial governments have also introduced policies to stimulate demand and supply. Subsidies on electric vehicles in India are among the highest globally, reaching up to 46% of the price of top-selling models. Furthermore, import taxes on EVs were reduced last year for global carmakers willing to invest $500 million within three years and initiate local production. Tesla can now benefit from a 15% import duty on up to 8,000 vehicles costing over $35,000, following Elon Musk’s complaints about high tariffs.

The entry of Tesla into India could inject fresh momentum into the country’s nascent but rapidly expanding EV market. While domestic players like Mahindra & Mahindra welcome competition, they emphasize the importance of a level playing field. Tesla’s advanced technology, robust battery systems, and superior user interface could differentiate it from local brands. Additionally, the rising preference for premium vehicles among India’s affluent consumers may bolster Tesla’s appeal. However, the company’s commitment to manufacturing in India remains uncertain, contingent on factors such as the expansion of India’s affluent consumer base and future trade negotiations with the US. For now, it seems India will initially see Tesla through luxurious showrooms rather than factories, reflecting a cautious approach to market entry.