Elon Musk, the CEO of Tesla, has been attempting to enter the Indian automobile market, facing significant trade barriers that have hindered progress.
Recent developments suggest that Tesla is preparing to sell electric cars in India, especially as Mr. Musk now holds a position of influence in the U.S. government as an aide to President Trump.
The company established a local subsidiary in 2021 and has had a relationship with India’s Prime Minister, Narendra Modi, for over a decade. However, Tesla currently lacks a manufacturing facility and a robust sales operation, having sold only a limited number of vehicles in the country.
President Trump has prioritized the sale of American cars in India and is advocating for the reduction of trade barriers on auto imports. Mr. Musk met with Mr. Modi during the Prime Minister's recent visit to Washington for discussions with President Trump.
According to three business sources familiar with real estate in New Delhi and Mumbai, Tesla is seeking leases for large commercial spaces in both cities. The company has also posted job listings in Mumbai, including roles that involve operations in New Delhi, indicating plans to open showrooms.
During their meeting, Mr. Trump remarked on Mr. Musk's interest in doing business in India, while the official statement from India noted discussions on enhancing collaboration in innovation, space exploration, artificial intelligence, and sustainable development.
Currently, India's tariff on fully assembled electric vehicles is set at 110 percent. Mr. Musk highlighted this challenge during a recent interview, noting the significant import duty.
Reports suggest that the tariff could be reduced to 15 percent if a company commits $500 million to production in India, although this lower rate would only apply to 8,000 units annually, with any additional units subject to higher tariffs.
Even if import barriers were lifted, Tesla may face challenges in the Indian market, where local manufacturers like Mahindra and Tata offer popular electric vehicles priced under $15,000, compared to Tesla's starting price of around $40,000. Additionally, there is currently no Supercharger network in India, which has been a key factor in driving Tesla demand in the U.S.
Vinkesh Gulati, an executive in the Indian auto industry, noted that Tesla is actively scouting for talent and showrooms in India, indicating the company's intent to enter the market. However, he believes Tesla will likely push to increase or eliminate the 8,000-unit limit for low-tariff imports.
Mr. Musk has expressed interest in India for several years and has made positive remarks about Prime Minister Modi. Although plans for a factory were previously discussed, they did not materialize.
In 2023, Tesla sourced approximately $1 billion in parts from Indian suppliers, indicating a level of engagement with the local market.
Additionally, Mr. Musk's satellite internet service, Starlink, is also seeking favorable policy changes in India, presenting further opportunities for collaboration between the U.S. entrepreneur and the populous nation.