Elon Musk, the CEO of Tesla, has been eyeing the Indian automobile market for quite some time. However, he has hit several roadblocks due to trade barriers that make it challenging to enter the market effectively.
Now, with Musk holding a significant advisory role in the U.S. government under President Trump, it seems Tesla is gearing up to introduce its electric vehicles to India. In 2021, Tesla set up a local subsidiary and has built a rapport with India’s Prime Minister Narendra Modi, which dates back a decade. Despite not having any manufacturing plants or a robust sales network in India, Tesla has only managed to sell a limited number of cars there.
President Trump is keen on boosting American car sales in India and is working to persuade Mr. Modi to ease the stringent trade barriers on automobile imports.
Recently, during the prime minister’s visit to Washington for talks with President Trump, Musk had discussions with Mr. Modi. According to three individuals familiar with New Delhi and Mumbai’s real estate markets, Tesla is in the process of securing leases for substantial commercial spaces in these cities. Two of these sources requested anonymity.
Tesla has also advertised a range of job openings in Mumbai, with some roles involving responsibilities in New Delhi. The job listings, which include positions like service managers, operations analysts, and sales staff, hint that Tesla is likely planning to open showrooms. As per a job posting on Tesla’s website, one role involves greeting guests warmly and engaging them in discussions about the vehicles.
Reports about Tesla’s interest in commercial real estate were first covered by Reuters. The meeting between Modi and Musk occurred on February 13, while the Indian leader was in Washington meeting with President Trump. Regarding their meeting, Trump mentioned, “I assume he wants to do business in India.” Officially, both parties discussed enhancing cooperation between Indian and U.S. organizations in areas like innovation, space exploration, AI, and sustainable development.
Currently, India imposes a whopping 110% tariff on fully assembled electric vehicles. During an interview with Fox News, Musk highlighted this aspect of India’s trade policy, noting it as “a 100 percent import duty.”
The Economic Times, an Indian daily, reported that there might soon be a policy shift that could see these rates drop to 15% for companies investing $500 million in Indian production. However, this reduced tariff would apply to only 8,000 units annually; anything beyond this would revert to the higher tariff.
Even with a reduction in import barriers, Tesla faces obstacles in cracking the Indian market. Local auto giants like Mahindra and Tata offer popular electric vehicles priced under $15,000, while Tesla’s starting price is around $40,000. Moreover, India lacks a Supercharger network, a factor that has significantly spurred Tesla’s demand in the U.S.
According to Vinkesh Gulati, a seasoned figure in the Indian auto sector, Tesla is on the hunt for talent and showrooms in India. He thinks Tesla is keen to demonstrate its commitment to entering the Indian market but might negotiate to raise or remove the 8,000-unit cap for low-tariff imports.
For years, Musk has shown interest in India. In 2023, he expressed his admiration for Modi, remarking at a press conference, “I am a fan of Modi.” Earlier, he voiced support for India’s bid for a permanent seat on the U.N. Security Council. Subsequently, Modi’s administration hinted at tariff reductions for companies like Tesla, on the condition they establish production facilities in India. Though Musk had plans to visit Modi in New Delhi, the trip was scrapped, and no factory was established.
Currently, Tesla sources only a modest number of components from Indian suppliers, having spent a reported $1 billion in India in 2023. Furthermore, Musk’s Starlink, his internet satellite service, is also seeking favorable policy adjustments in India, hinting at a broader synergy between Musk’s ventures and the world’s most populated country.
