In a move that has stunned Indian auto enthusiasts and policymakers alike, U.S. electric vehicle (EV) giant Tesla Inc. has officially decided not to manufacture its cars in India, according to Union Minister for Heavy Industries, H.D. Kumaraswamy. Instead, the company plans to limit its India strategy to imported car sales via showrooms, bypassing the government’s ambitious ‘Make in India’ EV push.
“Tesla only wants to open showrooms and sell imported cars. They are not interested in manufacturing in India,” the Minister said at a press briefing.
This statement comes just months after India rolled out a liberalised EV policy, offering up to 85% import duty concessions to global carmakers that commit to manufacturing EVs locally with a minimum investment of ₹4,150 crore ($500 million).
Why Tesla’s U-Turn Matters
India is one of the fastest-growing automobile markets in the world and a crucial battleground in the global shift towards electric mobility. The government’s vision to increase EV adoption to 30% by 2030 depends heavily on local manufacturing, affordable pricing, and foreign investment.
Tesla’s decision to stay out of manufacturing could mean its EVs will continue to be priced out of reach for most Indian buyers due to high import duties, even under the revised EV policy. It also places Tesla in contrast to competitors like Mercedes-Benz, Hyundai, Kia, and Volkswagen, all of whom have shown interest in tapping into India’s production ecosystem under the new policy framework.
Missed Opportunity or Strategic Wait?
Tesla CEO Elon Musk had earlier hinted at building a manufacturing base in India, even as the company scouted for showroom spaces in Mumbai and Delhi. Several rounds of talks with the Indian government and the Ministry of Heavy Industries had raised hopes for a possible Gigafactory.
However, with the latest revelation, experts say Tesla might be testing the waters with a premium-only strategy, gauging market response before making deeper commitments.
What’s at Stake for India?
- Economic Impact: Local manufacturing could have created jobs, boosted ancillary industries, and positioned India as a global EV hub.
- EV Affordability: Without local production, Tesla’s cars could remain ultra-premium in pricing, limiting mass-market penetration.
- Policy Credibility: The decision raises questions about India’s ability to attract the world’s top EV players despite offering incentives.
Yet, analysts say this isn’t the end of the road. “Tesla is a long-term player. If India can prove its demand and policy stability, they might reconsider,” said an industry insider.
