Tesla's Catch-22 in India

India's entire EV sector sells just 100,000 units annually

Tesla's path to entering India may have already hit an obstacle with U.S. President Trump declaring it would be "very unfair" for the company to build a factory in the world's most populous nation.

The remark underscores a complex dilemma for Tesla: India's new electric vehicle policy requires global automakers to invest at least $500 million in local manufacturing to qualify for reduced import duties, but Tesla appears to have no immediate plans for local production.

The reduced duties would lower import taxes on electric vehicles from 70-110% to 15%, but only for premium cars priced above $35,000. Even with these lower tariffs, the minimum landed price for Tesla vehicles would be about $40,000 — a steep cost in the Indian market, where the entire electric vehicle sector sells just 100,000 units annually, compared to China's 9 million.

Tesla's current product lineup appears ill-suited for the Indian market. Its Model 3 and Model Y vehicles are priced at $45,000 or higher in the United States and around $30,000 in China, positioning them in India's luxury car segment that sells about 50,000 units annually. The company has not announced plans for a more affordable model below $25,000, which analysts say would be crucial for meaningful market penetration.

Recent job listings in India suggest Tesla is preparing for a limited entry through imports rather than local manufacturing. The company is hiring for customer-facing roles like store managers, delivery specialists and service advisors, a marked shift from its previous recruitment efforts that included senior policy experts and engineers.