Tesla Enters India as Global EV Deliveries Continue to Sag in 2025

After years of speculation, negotiations, and anticipation, Tesla (NYSE: TSLA) has officially set foot in the Indian market. The US electric vehicle (EV) behemoth, led by Elon Musk, inaugurated its first showroom in Mumbai’s upscale Bandra Kurla Complex (BKC) today, marking a significant, albeit cautious, step into the world’s third-largest automobile market.

Tesla’s initial offering in India is the popular Model Y SUV, available in two rear-wheel-drive variants: the Standard and the Long Range. Prices for the Model Y in India start at approximately $69,770 (₹59.89 lakh, ex-showroom).

Tesla Finally Launches In India

The pricing is significantly higher than in other global markets like the US, China, and the EU. This premium pricing is predominantly due to India’s steep import duties, which can range from 70% to 110% on completely built units (CBUs).

Notably, US President Donald Trump has frequently called out India for its high tariffs and has particularly been critical of the country’s steep auto tariffs. A US-India trade deal is in the works, and the high tariffs on US vehicles might come down as part of the agreement.

Tesla Won’t yet Manufacture in India

Rather than committing to immediate local manufacturing, Tesla is importing cars to test the waters, understand consumer interest, and assess infrastructure and regulatory constraints. This “retail-first” approach allows the company flexibility while it navigates the complexities of the Indian automotive landscape.

Notably, over the past couple of years, there have been intermittent reports of Tesla establishing manufacturing operations in India. However, the company wasn’t able to get the kind of subsidies it was looking for, and the plans never took off. Currently, Tesla produces cars in the US, China, and Germany. It had plans to set up a plant in Mexico, but that project has been on the back burner as Tesla is currently grappling with overcapacity at its existing plants.

Tesla’s entry places it squarely in India’s nascent but growing luxury EV segment. It will face competition from established German luxury automakers like BMW and Mercedes-Benz, which already have a presence and offer EV models. While Tesla’s brand prestige and technological prowess are undeniable advantages, the relatively small size of the luxury EV market (around 4% of total auto sales) means it will initially remain a niche player.

TSLA’s Global Sales Have Plummeted

Meanwhile, Tesla’s long-awaited India entry comes at a time when the company’s global sales have been sliding and fell in double digits in the last two quarters. Last year, the Elon Musk-run company reported its first-ever annual fall in deliveries as a broader EV slowdown was made worse by rising competition, particularly in China. Musk’s political activities have also alienated some buyers, which is putting further pressure on its sales.

Elon Musk Is Launching a New Political Party

While many analysts – including long-time bull Dan Ives of Wedbush Securities – see Musk’s political activities as a negative for Tesla stock, Musk has doubled down on politics and is launching a new political party named “America Party.”

Notably, Musk headed Trump’s Department of Government Efficiency (DOGE) until May and was tasked with eliminating “wasteful” government expenses. However, the bonhomie between Musk and President Donald Trump ended shortly after the world’s richest person left the White House.

The feud started with Musk criticizing Trump’s tax and spending bill, but soon got ugly. Musk is against the One Big Beautiful Bill Act (OBBBA) as it would add to the national debt and undo the work he did at DOGE, and termed it “DEBT Slavery Bill.”

Meanwhile, many believe that Musk’s opposition to the bill is at least in part due to it ending the electric vehicle (EV) tax credit of $7,500. The credits, which helped make electric cars affordable for many Americans, would be terminated after September.

Tesla Faces Competition from Chinese EV Companies

Tesla is particularly facing tough competition from Chinese companies, both in China as well as globally, particularly in Europe. In April, BYD sold more battery electric vehicles (BEVs) than Tesla in Europe. While the Elon Musk-run company has been in Europe for quite some time now and also has one of its Gigafactories in Berlin, BYD entered the region only in late 2022. Moreover, BYD cars face tariffs in the EU, while the cars built by Tesla at its Germany Gigafactory are exempt from these tariffs.

BYD Looks Set to Beat Tesla to Become the Largest EV Seller

BYD surpassed Tesla’s total sales in 2022, even as the US EV giant retained the title of the biggest seller of NEVs. It hit yet another milestone when its 2024 revenues surpassed those of Tesla. BYD’s annual revenues rose 29% YoY to $107 billion last year, while Tesla’s revenues were around $97.7 billion. The steep rise in BYD’s sales was led by a record 4.27 million deliveries, which was well ahead of Tesla.

BYD has sold more NEVs than Tesla in the first half of 2025 on the back of strength in both Chinese and global markets, where its deliveries have hit record highs for seven consecutive months. BYD looks set to snatch the title of biggest NEV seller from Tesla this year as the latter continues to battle tepid sales, and expectations of a yearly rise in 2025 deliveries look bleak by the day.

Chinese EV Makers Are Challenging Western Automakers

To be sure, Chinese EV makers are challenging Western automakers in general, and Tesla is no exception. Several automakers, including Tesla and Ford, have acknowledged the prowess of Chinese EV companies, which are offering competitively priced models with exciting features.

For instance, in 2023, Musk praised BYD and termed it “highly competitive.” Last year, during Tesla’s Q4 2023 earnings call, Musk said, “Frankly, I think, if there are not trade barriers established, they will pretty much demolish most other companies in the world.”

The billionaire added, “The Chinese car companies are the most competitive car companies in the world. So, I think they will have significant success outside of China depending on what kind of tariffs or trade barriers are established.”

Overall, while Tesla’s India entry might be an incremental positive, it might not move the needle much for the company, given the low share of luxury cars in the country, whose per capita GDP is below $3,000.