At ₹63 lakh, Tesla competes with Mercedes-Benz and BMW, placing it in the ultra-premium EV segment that makes up less than 1% of India’s car sales.
15 Jul 2025 | 636 Views | By Prerna Lidhoo
Tesla has finally touched down in India. With the launch of the Model Y at a starting price of ₹60 lakh and the opening of its first showroom in Mumbai, the electric icon’s long-anticipated entry into the country has begun—but not with the market disruption many had hoped for.
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Tesla has finally touched down in India. With the launch of the Model Y at a starting price of ₹60 lakh and the opening of its first showroom in Mumbai, the electric icon’s long-anticipated entry into the country has begun—but not with the market disruption many had hoped for.
Premium Debut in a Price-Sensitive Market
The Model Y is a globally popular electric SUV, but in India, it's priced more than $15,000 higher than its U.S. sticker due to high import duties.
As part of its India debut, Tesla has announced that every customer will receive a complimentary home wall charger with their vehicle purchase. The company is also setting up four charging hubs across Mumbai, each equipped with 16 Superchargers and 16 Destination Chargers. “We’re starting with key locations across Mumbai: Lower Parel, BKC, Navi Mumbai, and Thane, to ensure a seamless charging experience for Tesla owners,” said Isabelle Fan, Director, South East Asia, Tesla.
At ₹63 lakh, Tesla is competing not with Tata and Mahindra, but with Mercedes-Benz and BMW. That puts it in the ultra-premium EV segment, which contributes less than 1% to total car sales in India.
"I don't see a big potential for Tesla in India considering the price it has launched at. The base price is very high. If they're going to play this game like this, India might not contribute to volumes the way you expect from such a big market. They're just playing a marginal role in India like luxury players such as BMW, Audi, and others," Felipe Muñoz, Global Automotive Analyst, JATO Dynamics, said.
Tesla's Strategic Bet on India
Globally, Tesla is under pressure. Sales have slumped in key markets like Germany and France, while China is becoming fiercely competitive. As the U.S. and Europe inch toward EV saturation, India offers visibility and prestige, if not volumes. Moreover, India’s EV luxury market is growing faster than the mass market, with EV penetration above 11% in the premium segment, thanks to the flat 5% GST on EVs compared to up to 48% on ICE luxury vehicles.
India’s rejection of Chinese EV giants like BYD and Great Wall also gives Tesla a geopolitical edge as it becomes the sole foreign premium EV marque without direct Chinese competition. But without local manufacturing, its volumes will stay modest. Musk had previously teased a $2-3 billion investment in India, including a factory, but cancelled his visit.
There’s also the question of Tesla’s real strategic focus. With Musk increasingly leaning into AI, robotaxis, and robotics (like Optimus), traditional vehicle markets like India might be more of a checkmark than a priority, experts point out.
Roadblocks Ahead
Tariffs are still steep, and Tesla’s direct-to-consumer sales model has not worked well in India before.
In addition, capacity glut at global plants could force India to become a dumping ground for excess inventory, not a core market. If volumes grow, then Tesla’s reliance on rare earths, currently in short supply from China, adds another layer of operational risk in a new market. Industry insiders say that unless the long-rumored $25,000 compact Tesla arrives or manufacturing begins here, Tesla will remain a 'status brand' for the few, not the mobility solution for the many.