Tesla Unlikely to Manufacture Cars in India, Says Minister

Tesla appears to have dropped plans to set up manufacturing operations in India, according to the country’s Minister for Heavy Industries, HD Kumaraswamy.

Speaking on Monday as the Indian government unveiled detailed guidelines for its electric vehicle (EV) manufacturing incentive scheme, Kumaraswamy stated bluntly: “Tesla – we are not expecting from them.” While other global automakers including Mercedes-Benz, Skoda-Volkswagen, Hyundai, and Kia have shown interest in manufacturing EVs locally, Tesla has not committed to the initiative.

This marks the first time Indian officials have publicly acknowledged that Elon Musk’s EV giant may not invest in the country’s manufacturing sector, despite months of discussions and government efforts to attract such investment through policy incentives.

Although Tesla is expected to open two retail showrooms in India, a senior government official confirmed that the company had not participated in later rounds of discussions about the local manufacturing scheme. Tesla reportedly took part in an initial stakeholder meeting but did not return for subsequent ones.

In March 2024, India announced a scheme aimed at encouraging global EV makers to invest at least $500 million and begin local production within three years, offering substantial import tax reductions as an incentive. The move came after Musk publicly criticised India’s steep import duties, which he said made entry into the market unfeasible.

Tesla had previously explored entering India in 2022 but pulled back when the government insisted it must manufacture locally before selling vehicles. Tesla preferred to test the market by exporting first.

In 2023, Musk said he was “trying to figure out the right timing” for Tesla’s India entry and even met with Prime Minister Narendra Modi in Washington, DC to discuss potential collaboration. Despite this, no firm commitment was made.

Analysts suggest India’s EV market may not be mature enough yet to support Tesla’s investment. EVs currently account for less than 3% of total passenger vehicle sales in the country, and local alternatives – such as those produced by Tata Motors and MG Motors – are significantly more affordable.

Additional concerns, such as inadequate charging infrastructure and challenging road conditions, could also be playing a role in Tesla’s hesitation.

Globally, Tesla is grappling with slowing sales and stiff competition from Chinese manufacturers like BYD. The company’s deliveries dropped to a three-year low in the first quarter of 2025, amid a wider backlash against Elon Musk’s political affiliations. Musk recently stepped down from a role in the Trump administration, a move that may further shape Tesla’s strategic priorities going forward.