Tesla is carefully weighing its entry into the Indian market, according to Chief Financial Officer Vaibhav Taneja, who spoke during an earnings call on Tuesday in the U.S. He confirmed the company’s interest in expanding to India, describing it as a promising market due to its large and growing middle class. However, he acknowledged the complexities involved, noting that India remains a difficult environment for foreign electric vehicle makers due to steep import tariffs and luxury taxes.
Currently, electric vehicles imported into India face tariffs of up to 70%, along with an additional 30% in luxury taxes. These charges could effectively double the price of a Tesla vehicle sold in the country, making affordability a major challenge. Taneja emphasized that this has prompted the company to move cautiously, as it navigates the right timing and conditions for market entry. Tesla is in discussions with Indian authorities to resolve these issues and reduce friction.
India, for its part, has shown interest in attracting Tesla’s investment. A potential policy reform under consideration could lower EV import tariffs from around 70% to 15% for manufacturers that commit to localizing a portion of their production. Such a measure could make Tesla’s business model more viable in the region, though industry observers suggest the company would still face pricing pressure and may push for further regulatory adjustments.
The topic gained renewed attention following conversations between Tesla CEO Elon Musk and Indian Prime Minister Narendra Modi. The two have discussed potential collaborations around innovation and technology, and Musk previously met Modi in Washington, D.C., fueling speculation about Tesla’s expansion strategy. Around the same time, reports surfaced that Tesla was exploring the possibility of importing EVs from its Berlin factory to India, potentially beginning as early as April.
However, ongoing trade tensions between the U.S. and India could complicate negotiations. New tariffs introduced by President Donald Trump on various U.S. trade partners, including a 10% duty on Indian goods, risk escalating to 36% if a temporary pause expires without a bilateral deal. Despite some progress in recent trade talks, these developments cast uncertainty over Tesla’s entry.
Meanwhile, Tesla reported disappointing first-quarter financials, including a 20% drop in automotive revenue year-over-year and a 71% decline in net income, increasing the urgency to identify new growth markets such as India.
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