Tesla Expands in India, the electric vehicle leader of the world, is preparing to make its entry in the Indian market. In a departure from expectations, the company will not produce EVs locally, but will set up showrooms and sell imported EVs.
Tesla’s store in the Bandra-Kurla Complex in Mumbai is complete, and Tesla has employed over two dozen staff including service personnel and store managers. Market entry planning is underway by the company in a few months’ time.
Though Indian attempts to lure Tesla involved reducing import duties for EV makers, Tesla did not show much interest in setting up a local plant as shown by the company’s no-show in subsequent meetings for India’s EV policy following attendance at preliminary meetings, showing no investment inclination.
India’s EV Policy and Tesla’s Inaction
In March 2024, India released its flagship EV policy, reducing import duties down to (15%) in exchange for a local vehicle production facility in India. Nonetheless, Tesla is importing vehicles and is not interested in manufacturing, listing tariffs and other operational grievances for its bid to manufacture locally.
Tesla has signed a five-year lease for its Mumbai showroom, which will cost the company around $446,000 per year. Tesla is also in the hiring phase, looking for a variety of positions, including store manager and service employees, which appears to indicate a focus on retail, not manufacturing.
There are a number of reasons that Tesla may be hesitant to manufacture in India, one being U.S. President Donald Trump’s view on manufacturing out of country. Trump has stated numerous times that Tesla establishing a factory in India would be “unfair” for the U.S. economy.
Tesla’s choice to import could slow India’s ambitions to become a global EV hub. Other automakers, including Mercedes-Benz, Hyundai, and Kia have decided to get into local manufacturing, while Tesla remains keenly focused on sales, not manufacturing.
Tesla’s India strategy focuses on expanding showrooms and direct sales outside of local manufacturing. While this action gets Tesla’s EVs into the hands of Indian consumers, it poses the question of Tesla’s long-term commitment to India’s growing EV sector.
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