New Delhi [India]: Even with a reduction in import duties to below 20%, Tesla’s most affordable car in India is expected to cost around ₹35-40 lakh, according to a report by global capital market company CLSA.
The report highlighted that Tesla’s cheapest Model 3 in the U.S. is priced at approximately $35,000 (around ₹30.4 lakh) at the factory level. After considering the revised import duty of 15-20% in India, along with additional costs such as road tax and insurance, the final on-road price is estimated to be around $40,000 (₹35-40 lakh).
“The cheapest Model 3 for Tesla in the U.S. is approximately $35,000. With tariffs lowered to around 15-20% in India, along with road tax, insurance, and other costs, the on-road price would be close to ₹35-40 lakh,” the report stated.
Limited Disruption to Indian EV Market
According to the report, Tesla’s pricing strategy may not significantly disrupt the Indian EV market. If the Model 3 is priced 20-50% higher than domestic electric vehicle models like Mahindra XUV 9e, Hyundai e-Creta, and Maruti Suzuki e-Vitara, it might struggle to gain widespread traction.
Even if Tesla introduces an entry-level model under ₹25 lakh on-road and gains market share, the report suggests that the recent decline in Mahindra & Mahindra’s stock already factors in this possibility.
Moreover, Tesla’s entry is unlikely to have a major impact on established Indian automakers since the overall penetration of EVs in India remains lower than in China, Europe, and the U.S.
Tesla’s India Expansion Plans
Tesla has officially begun its hiring process in India, signaling its serious intent to enter the market. On February 18, the company posted a job listing on LinkedIn for a Consumer Engagement Manager in the Mumbai Metropolitan Region.
In the coming months, Tesla is expected to launch its first models in Delhi and Mumbai. However, the report emphasizes that for Tesla to achieve competitive pricing and expand its operations, setting up a local manufacturing facility will be crucial.
The Need for Local Manufacturing
Under India’s EV policy, Tesla could benefit from a lower import duty of 15% on up to 8,000 units per year if it invests over ₹4,150 crore in a local manufacturing facility. Without this investment, Tesla’s cars may remain out of reach for most Indian buyers.
The report also draws a parallel with the Indian motorcycle market, where Harley-Davidson’s X440, priced 20% higher than the Royal Enfield Classic 350, sells only around 1,500 units per month, while the Classic 350 sells about 28,000 units monthly. This highlights the strong price sensitivity of Indian consumers, posing a challenge for Tesla’s premium-priced vehicles.
Conclusion
Tesla’s entry into the Indian market depends on its willingness to invest in local manufacturing. Without a significant commitment to production in India, even reduced import duties may not be enough to make Tesla’s vehicles accessible to a large segment of Indian consumers.