Tesla's India Plans Stall
Tesla's ambitious plans to build a manufacturing base in India are now mired in uncertainty. The stalemate is reportedly linked to political tensions involving Elon Musk and former President Donald Trump, complicating negotiations and casting doubt on a key piece of Tesla's global expansion strategy.
For years, negotiations for a Tesla Gigafactory in India, a proposed $2-3 billion investment with a potential annual capacity of 500,000 vehicles, showed promise. The talks centered around a new, more affordable Tesla model, priced between $22,900 and $28,625, aimed at the Indian and export markets. India, in March 2024, rolled out a new electric vehicle policy seemingly tailored to attract manufacturers like Tesla. The policy offered a significantly reduced import duty of 15%, down from as high as 110%, for companies investing a minimum of $500 million and committing to local production within three years. The landscape shifted following public statements by former President Donald Trump, who characterized a potential Tesla factory in India as "very unfair" to the United States. Trump's criticism focused on India's high import tariffs on American-made cars, an issue he reportedly raised with Indian Prime Minister Narendra Modi. In a significant turn, India's Union Minister for Heavy Industries, HD Kumaraswamy, stated in June 2025 that Tesla is "not interested" in manufacturing in the country. The company's current focus has reportedly shifted to establishing showrooms to sell imported vehicles instead. This development has not deterred other major automakers. Hyundai and Kia have announced plans to launch their first India-made electric vehicles by 2025, with Hyundai intending to produce five EV models locally by 2030. Chinese automaker BYD, which has already surpassed Tesla in global EV sales, is also making inroads in India. The company is reportedly working on a car model specifically for the Indian market and is considering local assembly options to navigate India's import regulations. The initial optimism surrounding a Tesla manufacturing presence in India has been replaced by a "wait and see" approach. Elon Musk has previously stated that Tesla would not establish a manufacturing plant in any country where it is not first allowed to sell and service its cars. While Tesla's component sourcing from India has been on the rise, its manufacturing ambitions remain in limbo. The focus now shifts to whether the sales of imported Teslas will eventually pave the way for a renewed discussion about local production.
