Tesla has confirmed it will not take advantage of India’s newly launched electric vehicle manufacturing incentives, despite New Delhi’s efforts to attract global automakers.
On Monday, Heavy Industries Minister H.D. Kumaraswamy stated that Tesla is “not interested in manufacturing in India,” even as companies like Mercedes-Benz, Volkswagen, Hyundai, and Kia explore the benefits offered by the government.
India’s incentive framework cuts import duties to 15%—down from 70%—for automakers that commit roughly $500 million to local EV assembly and satisfy prescribed domestic content requirements.
However, Tesla plans to continue importing fully built cars, a strategy CEO Elon Musk has repeatedly criticized due to India’s high tariffs. While a Tesla representative participated in early policy consultations, subsequent discussions proceeded without the company’s involvement.
Tesla’s earlier ambition to establish a manufacturing base in India was abandoned in 2022 after authorities insisted on local production. The automaker preferred to first assess market demand via imports.
Despite a meeting between Musk and Prime Minister Narendra Modi to discuss technological collaboration, Tesla’s stance on manufacturing remains unchanged. Analysts suggest that India’s EV market—still below 3% of total passenger vehicle sales—may not yet justify Tesla’s investment, particularly given cost-competitive domestic alternatives and limited charging infrastructure.
Currently, Tata Motors leads India’s EV market with over 60% share, followed by MG Motors at 22%. As India aims to bolster its EV ecosystem, Tesla’s decision underscores the obstacles that steep import duties and nascent market conditions pose for foreign entrants, even as established local manufacturers ramp up production.
