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New Delhi: Tesla, the electric vehicle (EV) giant led by Elon Musk, is reportedly making its official entry into India. The company has apparently finalized the location for its first showroom in the country, marking a significant milestone in its expansion plans.

According to registration documents, Tesla has reportedly signed a lease agreement to set up a showroom in Mumbai, one of India’s key commercial hubs.

Tesla’s First Showroom in Mumbai

The showroom will be located in the Maker Maxity building in the Bandra Kurla Complex (BKC), an area known for its high-end business and retail establishments. Situated near Mumbai airport, this prime location will offer Tesla exposure to a wealthy customer base and business visitors.

The lease agreement, effective from 16 February 2025, spans five years, with an initial annual rent of approximately $446,000. The rent is set to increase by 5 per cent every year, reaching around $542,000 by the fifth year.

Tesla’s move to set up operations in India comes shortly after Prime Minister Narendra Modi met with Elon Musk in the US, where discussions reportedly focused on EV manufacturing and infrastructure in India. With this showroom, Tesla is taking its first concrete step into India’s growing EV market.

India’s EV Market: Growth and Challenges

As Asia’s third-largest economy, India presents an intriguing opportunity for Tesla, especially at a time when the company faces challenges in global markets, including declining EV sales and increasing competition from Chinese manufacturers.

However, Tesla’s ability to establish a strong presence in India depends on multiple factors, including pricing, local infrastructure and government policies.

Current EV Sales Trends in India

According to JMK Research & Analytics, the total cumulative EV sales in India reached 5.6 million units by the end of 2024. In 2024 alone, more than 2 million EVs were sold, with the majority being electric two-wheelers (E2Ws), which accounted for over 50 per cent of the market. Passenger electric three-wheelers (E3W P) followed, securing a 36 per cent market share.

Among states, Uttar Pradesh, Maharashtra, Karnataka, Delhi and Rajasthan led in all EV sales, making up over half of India’s EV market. In terms of electric cars, the segment saw a year-on-year growth of 8.6 per cent in 2024. Tata Motors dominated the E-Car category with over 60 per cent market share, followed by MG Motor at 22 per cent.

In early 2025, the market witnessed further momentum, driven by consumer adoption and government incentives. In January 2025, electric car sales surged to 11,194 units, marking a 27 per cent month-on-month increase and a 27 per cent rise compared to January 2024.

Tata Motors retained its dominance with a 45 per cent market share. However, in February 2025, E-Car sales dipped to 8,871 units, reflecting a 21 per cent decline from the previous month, though year-on-year sales still grew by 25 per cent.

Despite this growth, Tesla’s success in India is not guaranteed. The company must navigate challenges such as road conditions, infrastructure gaps, and the high price sensitivity of Indian consumers. Without a locally manufactured, affordable model, Tesla may struggle to gain significant market share, as the majority of EV buyers in India currently opt for budget-friendly options.

Government Policies and Incentives for EV Adoption

The Indian government has been actively promoting EV adoption through various policies. Union Minister Nitin Gadkari has previously stated that India’s EV market could reach a valuation of Rs 20 lakh crore by 2030, signaling massive growth potential.

In March 2024, the government approved a new policy aimed at attracting global EV manufacturers to set up local production facilities. The policy includes the following key provisions:

A minimum investment requirement of Rs 4,150 crore, with no cap on maximum investment.
A three-year timeline for setting up manufacturing plants and beginning commercial production.
A target of achieving 50 per cent domestic value addition within five years.
Lower customs duties for limited imports of EVs by companies that commit to local manufacturing.

Additionally, the second phase of the FAME India Scheme (Faster Adoption and Manufacturing of Electric Vehicles) was introduced in 2019 with an initial allocation of Rs 10,000 crore, later increased to Rs 11,500 crore. This phase primarily focuses on electrifying public and shared transportation, with incentives for electric buses, three-wheelers, four-wheelers and two-wheelers.

Several state governments have also introduced their own EV policies, offering subsidies, reduced road taxes, and infrastructure development support to encourage EV adoption. These measures have contributed to increasing consumer confidence and accelerating the transition from traditional fuel-based vehicles to electric alternatives.

In a major policy shift, India recently announced a reduction in import tariffs for premium EVs priced above $35,000. The duty has been slashed from 110 per cent to 15 per cent, provided manufacturers meet specific investment and production criteria.

This move could benefit Tesla in the short term by allowing it to import cars at lower costs while it establishes local manufacturing.

What’s Next for Tesla in India?

While Tesla’s entry into India marks a significant development, the company’s long-term success depends on its ability to address pricing concerns and infrastructure challenges. Currently, Tesla’s premium vehicles cater to a niche segment in India and without a competitively priced model, its market reach will remain limited.

To gain a strong foothold, Tesla may need to introduce a low-cost EV designed specifically for Indian consumers. Additionally, expanding the EV charging network and working with local suppliers to meet domestic value addition requirements will be crucial for Tesla’s growth in the country.

While Tesla prepares its entry, a prominent business leader, advocating for Tata and Mahindra, asserted that success in India ‘is not an easy job’ for Musk. This statement reflects the strong belief within the Indian ecosystem that domestic manufacturers will continue their market dominance.

However, as the Indian EV market continues to evolve with increasing government support and growing consumer demand, Tesla’s presence is likely to influence competition and drive innovation. Overall, whether the company can replicate its global success in India remains to be seen.