After years of delays and setbacks, Tesla finally launched its operations in India on July 15, 2025, with the Model Y electric SUV. The company opened its first showroom in Mumbai and plans to expand to Delhi soon. Mumbai’s transport office approved Tesla for sales and test drives on July 11.
Tesla’s pricing strategy shows it’s not targeting everyday buyers. The Model Y starts at ₹58 lakh, about $70,000, making it the most expensive Model Y in the world. This price puts it in direct competition with luxury brands like BMW and Mercedes. Import duties over 100% are the main reason for the high cost. Despite the premium pricing, Tesla continues to attract a niche market that values innovation and technology over cost. Interestingly, reports have surfaced regarding a Tesla Model Y price cut in Canada, which might indicate a strategic move to expand their customer base in North America. This adjustment could signal a shift in their pricing approach as they navigate competition and market dynamics.
Model Y debuts as world’s priciest variant, competing with BMW and Mercedes in luxury segment
The company’s expedition to India wasn’t smooth. Tesla first accepted Model 3 pre-orders in 2016 but refunded them in 2025 after failing to enter the market. In 2017, Elon Musk called India’s 100% import duties a “major hurdle.” Tesla registered its Indian entity in Bengaluru in 2021 and discussed building a $2 billion factory between 2022 and 2023, but those talks stalled.
Tesla won’t manufacture cars in India yet. The vehicles displayed in Mumbai came from Tesla’s Shanghai factory. The company will rely on imports for now, taking advantage of its extra production capacity at global factories. This strategy coincides with stagnating demand in key markets like the U.S. and China. Local assembly might happen if the US and India reach a trade deal to lower import duties.
The company faces significant challenges in India. Electric vehicles make up less than 5% of car sales in the country. Most Indians can’t afford cars priced above ₹60 lakh. Tesla’s targeting the luxury segment, which represents only 1% of India’s car market. India’s new SPMEPCI policy announced in March 2024 reduced import duties on EV CBUs to 15%, but requires companies to invest Rs 4,150 crore and begin local production within 3 years. Despite these obstacles, India ranks as the world’s third-largest car market, offering growth potential. However, resale value concerns may further impact buyer confidence, as Tesla’s depreciation rates have significantly outpaced traditional luxury vehicles globally.
Tesla will spend the next few months before September 2025 deliveries setting up after-sales service and expanding its charging network. The company will sell directly to customers instead of using traditional dealerships. Government EV subsidies might help Tesla, but high import costs remain the biggest barrier to reaching more buyers in India’s price-sensitive market.