Tech
Why Tesla Cars Will Still Cost Rs 35-40 Lakh in India Despite Lower Import Duties
Despite lower import duties, their car price tag is still projected to stand in the range of Rs 35-40 lakh. A recent report by CLSA, a global capital market firm, sheds light on why Tesla’s entry might not be the affordable game-changer many hoped for and what it could mean for India’s electric vehicle (EV) market.
Breaking Down the High Price Tag
In the U.S., the Tesla Model 3, the company’s most budget-friendly option, starts at around USD 35,000 (roughly Rs 30.4 lakh). When India is planning to reduce import duties from the current 60%, as much as 15-20%, to cars up to US$40,000, the cost in practice should theoretically go down. However, additional expenses like road tax, insurance, and shipping costs push the on-road price to approximately USD 40,000, or Rs 35-40 lakh. This places Tesla firmly in the luxury car segment, which is beyond the reach of most potential Indian consumers.
Will Tesla Shake Up India’s EV Market?
According to the CLSA report, Tesla’s high cost may not have the deterrent effect it is hoped to have on India’s EV market unlike what is being projected. Domestic companies such as Mahindra (with its XEV 9e), Hyundai (e-Creta) and Maruti Suzuki (e-Vitara) provide pricej-friendly options to Indian market. Even if Tesla launches a cheaper model below Rs 25 lakh, the report argues it may not significantly challenge local automakers, who are already carving out a strong presence in the EV space.
Tesla Model 3 Spotted In India!
For the past few days, Tesla has been in limelight with rumours suggesting it's entry in India! In fact sources claim that Tesla might launch it's first EV by April 2025 – at Rs 21 lakh!
And now, we have first Tesla spotting in India!
Excited? pic.twitter.com/S9OEdsk7oM
— MotorOctane (@MotorOctane) February 21, 2025
Local Manufacturing: The Path to Affordability
if Tesla invests over Rs 4,150 crore in a local facility, they can import up to 8,000 units annually at just 15% duty. So, this step may offer price reductions and increase Tesla’s market share.
Apart from cost, local fabrication has the potential to provide employment, improve the EV infrastructure, and contribute to the “Make in India” campaign in India. It could also lead to technological evolution in the domestic auto sector.
India’s Price-Sensitive Reality
India’s market thrives on value-for-money options. The report compares Tesla’s challenge to Harley-Davidson’s experience in the motorcycle segment, where the X440, priced 20% higher than the Royal Enfield Classic 350, sells just 1,500 units monthly against Royal Enfield’s 28,000. This underscores a key hurdle: without competitive pricing, Tesla could struggle to gain traction.
Tesla’s First Steps in India
It is not just Tesla that is getting ready, jobs advertising Consumer Engagement Manager in Mumbai, amongst others, are already live, and Delhi and Mumbai are next to be added soon. Although high premium may restrict short-term effect, the technical advancement and brand fame of Tesla may stimulate the interest and be illustrative for the adoption of more general EVs.
What’s Next for Tesla in India?
It is growing in India, driven by government programs such as FAME II and increasingly eco-friendly concern, but it still falls behind the so-called global giants, such as China and Europe. Tesla’s move into the market may speed up this change, however, the barrier continues to be price. Local production could be the pathway to truly scaling up Tesla’s potential to become a mainstream player in India, moving beyond the realm of a luxury niche.