India's Automotive Market Size

Tesla Arrives in India After Years of Negotiations and Delays: India's Automotive Market Size and Growth Opportunities Analysis By Spherical Insights & Consulting

RELEASE DATE: Jul 2025 Author: Spherical Insights
According to a research report published by Spherical Insights & Consulting, The India Electric Vehicle Market Size is projected to Grow from USD 6.25 Billion in 2024 to USD 410.23 Billion by 2035, at a CAGR of 46.28% during the forecast period 2025–2035

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Tesla’s delayed entry into the Indian market, despite its initial plans dating back to 2016, was the result of multiple interconnected challenges. One of the most significant barriers was India’s steep import duties reaching up to 100% on completely built electric vehicles, which made Tesla's models considerably more expensive for Indian consumers. Regulatory hurdles also slowed progress, with Tesla facing complex approval processes and a lack of clarity around EV-specific policies and certification. Compounding the issue was Tesla’s reluctance to commit to local manufacturing; the Indian government firmly insisted that tax benefits would only apply to companies producing or assembling vehicles domestically, aligning with its "Make in India" initiative. At the time, India also lacked the high-speed charging infrastructure needed for Tesla’s performance-focused vehicles, making the logistics of ownership less viable. Furthermore, the Indian market was still in its early stages, dominated by affordable EVs and two-wheelers, while Tesla’s premium pricing positioned it well above the average consumer's budget. Frequent policy shifts, uncertain incentives, and a lack of long-term strategic clarity around EV adoption further added to Tesla’s hesitancy. Public disagreements between Elon Musk and Indian government officials, often played out on social media, also contributed to the strained relationship, delaying Tesla’s long-anticipated debut in one of the world’s most promising EV markets.

 

 

Tesla Enters Indian Market After Years of Delays and Regulatory Hurdles

The US electric vehicle (EV) industry player and well-established company at the global level, Tesla, inaugurated a retail showroom in Mumbai in July 2025. Years of negotiating tactics and regulatory obstacles contributed to this retail debut. It shows caution in the appearance of complex tariffs and safeguards for industries with committed to local manufacturing, and the corporation to evaluate the Indian market. The opening of Tesla's first showroom in Mumbai marks the company's official entry into the Indian market. Also, located in the city's most affluent commercial zone, Bandra Kurla Complex (BKC). Tesla will first import and market its well-liked Y model automobiles having base price of the long-range, rear-wheel drive vehicle being 6.78 million rupees ($79,089). Delivery is anticipated to begin in the third quarter, according to Tesla officials. This is the start of Tesla's eagerly anticipated voyage in India, a market with a lot of potential. Soon, a location in Delhi-NCR will be added.

 

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Market Statistics:

  • India's EV sector achieved a significant milestone in the fiscal year 2024–2025, with over 1.7 million electric vehicles sold, a 96% year-over-year growth.

 

  • Five states saw strong double-digit growth, while the top seven states accounted for 64% of India's record retail sales of 1.96 million EVs. Maharashtra is the state with the most sales of EVs. Uttar Pradesh is still in first place with a 19% share, while EV sales in Gujarat fell 22% year over year.

 

Tesla EV and Indian Electric Vehicle Market Overview:

According to a research report published by Spherical Insights & Consulting, The India Electric Vehicle Market Size is projected to Grow from USD 6.25 Billion in 2024 to USD 410.23 Billion by 2035, at a CAGR of 46.28% during the forecast period 2025–2035. The government encouragement of efforts to promote the use of electric vehicles (EVs) through infrastructure development and subsidies is driving this industry. Additionally, growing consumer awareness of environmental sustainability and EVs' rising accessibility stimulate market expansion, highlighting India a major role in the global EV industry and the Asia Pacific region as well.

 

 

Unveiling Tesla's Footprint in the Indian Automotive: Delays, Deals, and Debut.

With the opening of its first dealership in Mumbai, Tesla has now formally entered the Indian electric vehicle market. The new showroom is situated in Bandra Kurla Complex's (BKC) Maker Maxity Mall, one of Mumbai's most prominent locations. Before this, Tesla fought and sought for many opportunities to influence and contribute to the Indian automotive industry, but some obstacles slowed down this key change, and focus still negotiating. There is outlook related to the journey of Tesla in the Indian automotive sector.

 

Early Investment and Tariff Challenges, 2016–2021

There is genuine interest in the market; Tesla began taking pre-orders for the Model 3 in 2016 with refundable reservations for this model.

 

Main Turning Year 2017:

Elon Musk publicly acknowledges the tax-related difficulties, pointing out that a major obstacle to the launch of the Tesla brand in India is the 100% import duties on luxury cars.

 

The negotiation Step in 2022–2023: Discussions to build a $2 Billion Manufacturing Facility

2022: Musk blamed India's high import duties in January for making it harder for Tesla to do business in that country. In addition, the company began the process of homologating four of its models in India while thoroughly testing the Model 3.

2023: Tesla began hiring locally in Mumbai this year for a total of 13 positions, indicating a physical presence. Furthermore, Tesla had looked into proposals for a $2 billion factory in Gujarat or Maharashtra, but by the middle of 2023, negotiations had come to a standstill because of high tariffs and India's insistence on local manufacturing terms, which Tesla wasn't prepared to accept.

 

2024–2025: Key Turn in Policy Allows Growth Opportunities

India announced the SPMEPCI policy in March 2024, which reduces import duties on EV CBUs costing more than USD 35,000 to 15%. This reduction is contingent upon manufacturers investing at least Rs 4,150 crore (USD 500m) and starting local production within three years, as well as achieving 25% domestic value addition within three years and 50% within five. Five-year import cap of 8,000 units per year.

Early in 2025, Tesla began hiring additional staff members for retail operations positions in Delhi and Mumbai, including shop managers, salespeople, service executives, and autopilot operators.

Mid-2025, Registration windows open and policy details are finalized; several international OEMs, except Tesla, publicly declare interest in the program.

 

July 2025: Mumbai Launch

The showroom opened in Bandra Kurla Complex, Mumbai, and intends to open a second site in Delhi-NCR shortly after. According to reports, Tesla plans to launch its retail business with the Model Y SUV. Additionally, reports indicate that the car's documented price, before tariffs, is approximately Rs 27.7 lakh. Import taxes for each vehicle have increased by Rs 21 lakh, which could raise the final cost above Rs 50 lakh. It is anticipated that the first shipment of Model Y cars will arrive in India.

 

Is there a big picture in the mind of Elon Musk related to the Indian automotive industry?

Innovation has always been associated with Elon Musk and Tesla. The goal is to transform India's transportation system, in addition to promoting luxurious automobiles. India's electric vehicle (EV) market is changing dramatically due to a combination of consumer demand, legislative backing, and a wave of innovation. This sector is investing in battery technology, increasing manufacturing, and developing charging infrastructure with the support of programs like FAME II, PLI schemes, and state-level subsidies. The introduction of Tesla into the Indian market, with Musk serving as CEO, is an indication of confidence in India's ability to set the standard for sustainable energy and innovative transportation. This approach might additionally promote changes that encourage the introduction of EVs, such as more favorable financing to reduced taxes on domestically produced vehicles.

 

Key Strategies and Approach for India by Tesla

A $2–3 billion manufacturing facility with an annual capacity of 500,000 vehicles is part of Tesla's entry strategy into India. A model priced between RS 20 and RS 25 lakh would be introduced by the company to cater to Indian customers. Tesla has numerous advantages over its competitors. Among these are its reputation as a technologically advanced automaker and its widespread brand recognition. Moreover, technologically savvy consumers would be greatly attracted to its advances, knowledge of battery economy, and autonomous driving capabilities. Although its product line is anticipated to be more affordable for the Indian market, its reputation as a high-end EV manufacturer may enable it to seize a little market share before rivals react by gradually opening them up to a larger audience.

 

Primary Objectives:

Regional Sourcing for Batteries and the Supply Chain

Tesla is negotiating to localize its supply chain with Indian auto component makers and international battery suppliers to reduce costs and be eligible for subsidies under India's PLI plan. Collaborations for the production of battery cells and the refinement of lithium are also being investigated.

 

Collaboration on Charging Infrastructures

Tesla is anticipated to establish its network of Superchargers in a few Indian cities, perhaps in association with Indian energy firms such as Adani or Tata Power. Building early users' confidence requires establishing a charging ecosystem.

 

The approach in Software and Connectivity

Tesla's competitive advantages include AI-driven vehicle optimization, over-the-air updates, and Autopilot, all of which may appeal to India's tech-savvy customer base. Features like voice commands, infotainment, and navigation may also be customized for Indian languages and traffic patterns.

 

Snapshot on the Indian EV sector with key industry players

Few EVs were available in the mass market segments in India years ago, and luxury EVs were only starting to appear. In India, automakers such as Mercedes-Benz were even producing some of their electric vehicles. The current state of the market gives the impression that Indian automakers, particularly Tata and Mahindra, have advanced significantly. Even Maruti Suzuki and Hyundai have produced EV vehicles especially for the Indian market, while Tata has five different electric cars, and Mahindra has three. Additionally, the XEV 9e, BE6, and Harrier EV from Tata and Mahindra can perform well enough to rival the Tesla Model Y.

 

Before Tesla, some key companies invested in the Indian Automotive Industry.

  1. Tata Motors (Models: Nexon EV, Tigor EV, Punch EV, Tiago EV)
  2. Mahindra Electric (Models: e-Verito, e2o Plus, XUV400)
  3. MG Motor India (Models: MG ZS EV, Comet EV)
  4. BYD India (Build Your Dreams) (Models: BYD e6, Atto 3)
  5. Hyundai India (Models: Kona Electric, Ioniq 5)
  6. Mahindra (Model: XEV 9e, BE6)

 

Tesla's Dynamic Plan to separate itself compared to Home-grown industry Players in the Indian EV Market.

Important Components of Tesla's Indian Growth Strategy

  1. Initial Import Strategy

Market Entry: To comply with Indian government preferences and new regulations that support non-Chinese imports, Tesla is first importing high-end Model Y automobiles from its Berlin Gigafactory, avoiding China.

Displays and urban focus: to evaluate the market demand for its luxury automobiles and reach India's wealthy clientele, Tesla is opening experience centers in Mumbai and New Delhi.

 

  1. Devotion to Local Manufacturing

Entry-incentive: India's March 2024 EV policy permits international EV manufacturers to import up to 8,000 vehicles annually at a 15% customs duty (down from the previous 110%), provided they agree to manufacturing locally for 500 million within three years.

Plans for Gigafactory: With incentive packages available in states like Tamil Nadu and Gujarat, Tesla is actively looking for potential sites for a sizable manufacturing facility. According to reports, initial plans call for an investment of 2–3 billion, with a capacity of about 500,000 vehicles per year.

Model specifically for India: Tesla is creating a new, more affordable EV (estimated between USD 22,900 and 28,625) for Indian customers to gain widespread acceptance in a budget-conscious market.

 

  1. Technological and economic advantages

Technical aspects: Tesla intends to use its software (Autopilot, over-the-air upgrades), battery breakthroughs, and strong brand to differentiate itself from regional rivals that prioritize price above modern technology.

Infrastructure for charging: To encourage its customers and the broader adoption of EVs, Tesla aims to establish Supercharger stations in key cities by 2025, with four initially intended in Mumbai.

Export hub vision: While manufacturing picks up speed, India may become a regional export base to Southeast Asia, creating jobs locally and ensuring the profitability of Tesla's presence.

 

Tesla Faces Global Sales Slope with Increasing Industry Shifts and Competitiveness

According to TechCrunch, Sales of Tesla's China-made electric vehicles, including both domestic sales in China and exports to Europe and other markets, climbed 16% year over year. The company's Q2 deliveries, however, dropped 6.8% year over year for the third consecutive quarter as local competitors increased their market share. For the fifth consecutive month, Tesla's sales in Europe fell by almost 28% year over year in May, even though the continent's total auto sales jumped 1.9%. Additionally, during the first half of this year, the company's U.S. sales declined 13% year over year to 255,000. Furthermore, in the second quarter, Tesla's worldwide sales fell 13% to 443,956 units.

 

Overview of Car Model

With the Model Y, a mid-size SUV that blends performance, range, and a tech-first design, Tesla has decided to introduce its globally top seller to India.

Versions that are available in India: Rear-wheel drive (RWD) Model Y: RS 59.89 lakh
RS 67.89 lakh for the Model Y Long Range RWD Price on the road: around RS 69–72 lakh, based on locality

 

Specifications:

Performance and Range: On a full charge, the Standard RWD can travel 500 km at WLTP and can accelerate from 0 to 100 km/h in 5.9 seconds. This is extended to 622 kilometers and a faster 5.6-second sprint in the Long Range version, with a maximum speed of 201 km/h for both.

Charging: In India's evolving charging infrastructure, owners may add up to 267 km of range in just 15 minutes with Tesla's nationwide Supercharger network and rapid charging capabilities. This is essential for longer trips.

Technology: The 15.3-inch touchscreen, over-the-air software upgrades, and sophisticated driver-assistance features like automated emergency braking, blind-spot monitoring, and lane-keeping assistance dominate the Model Y's minimalist interior.

Comfort and Safety: A luxurious, secure journey is guaranteed by heated and ventilated seats, a panoramic glass roof with UV and infrared protection, and eight external cameras.


Tesla's assurance in its products is demonstrated by its guarantee, which is 4 years or 80,000 km for the vehicle and 8 years or 192,000 km for the battery and drive unit.

 

Final Sum up

Tesla is positioned to make a big impact in India, one of the auto markets with the fastest rate of growth in the world. The introduction of Tesla represents more than just the debut of a high-end automaker. It could change how electric mobility is viewed in India. The launch encourages homegrown companies like Tata and Mahindra to increase their innovation and supports the nation's expanding EV charging network. Whether or not policy stability can support the company's long-term strategy and how quickly it commits to building a plant will determine its future in India. The official start of Tesla's India journey has been marked by the opening of the Mumbai showroom. After almost a decade of cautious steps, policy discussions, and pre-orders, it is finally here. Even though the path ahead is still being built, one thing is certain: Tesla has arrived.

 

About the Spherical Insights & Consulting

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