Even Tesla, the billionaire Elon Musk’s electric car company darling, is facing a growing tidal wave. These challenges have complicated its more recent efforts to break into the Indian market. Internal complications have plagued the firm following several rounds of negotiations. Despite that meeting between Musk and Prime Minister Narendra Modi in Washington, D.C., earlier this year, there remains minimal enthusiasm for setting up manufacturing plants in the country.
Tesla had indicated its original intent was to export vehicles to India first to test the market before making any additional investments. Major concerns for the carmaker include high import duties. They are convinced these tariffs are preventing their efficient entry into the market. The new heavy industries minister in India’s government, HD Kumaraswamy, made waves recently with this declaration. He announced, “Tesla – we are not counting on them,” an indication that the federal government is not counting on much investment from the U.S. automaker from the start.
In earlier discussions with Modi, Tesla highlighted the “immense potential” for collaboration in technology and innovation, suggesting a willingness to explore different avenues of partnership. Despite Tesla’s plans not coming to fruition as expected, the company intends to open two showrooms in India to establish a retail presence, but this is seen as a far cry from local manufacturing.
Elon Musk’s recent statements on the Indian market haven’t helped dispel that uncertainty either. Earlier this year, for example, he said he was “waiting for the right moment” to invest in India. This sentiment reflects Tesla’s cautious approach to entering a market where locally made alternatives are significantly cheaper than Tesla’s base model, which is costly by comparison.
The latter case has gotten a lot more complicated since February. Former U.S. president Donald Trump said at the time that it would be “unfair” for the U.S. if Tesla were to build a factory in India. In short, this commentary has increased pressures on Tesla as it seeks to find and balance international relations and logistics in its forthcoming manufacturing decision.
Even after India’s recent decision to eliminate import taxes on EVs for global automakers from around the world, including Tesla, the picture looks dim. The company pledged $500 million to develop and localize production in-country within three years. That investment is now far from guaranteed, especially in light of Kumaraswamy’s comments.
The number of Teslas sold has plummeted. In fact, they dropped down to a three-year low of 18 percent in Q1 2025. This steep drop shifts things up a notch in difficulty as the company re-evaluates its strategy worldwide and where it should be focusing its global growth.