Nomura sees Tesla boosting EV adoption, CLSA dismisses disruption fears

The Auto index has tanked over 17 percent in the last six months.

Ever since Prime Minister Narendra Modi met Elon Musk in the U.S., speculation over Tesla’s entry into India has been gaining steam. While the EV giant has accelerated its efforts to set up operations, brokerage views remain divided on its impact.

Nomura believes India’s evolving EV policy will fast-track electric vehicle adoption, making it easier for Tesla and other global automakers to invest. The policy shift is also expected to expand India’s charging infrastructure, benefiting key suppliers like Sona Comstar, Sansera, and Motherson Sumi. However, the brokerage remains doubtful that Tesla will introduce a budget-friendly Rs 21 lakh model, as some reports have suggested.

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CLSA, on the other hand, warns that market excitement around Tesla’s India entry may be excessive. While a sub-Rs 25 lakh on-road model could help the American giant gain strong market share, the brokerage does not see its arrival significantly impacting established players like Maruti Suzuki, Hyundai, or Tata Motors. Instead, Tesla’s presence is likely to drive premiumization in India’s auto market.

Despite the intense speculation, CLSA highlights that Tesla would need local manufacturing to scale effectively. Even with import duties below 20 percent, pricing vehicles under Rs 35-40 lakh would remain a challenge without a domestic production setup. As Tesla’s India strategy unfolds, analysts remain watchful of its next move in one of the world’s fastest-growing automobile markets.

Experts also suggest that auto ancillary companies could also benefit from Tesla's entry into India. "It is not just a sentimental boost, this is a big positive for Indian auto ancillary companies if this is to happen," Siddhartha Khemka, Head of Research and Wealth Management at Motilal Oswal said in a conversation with Moneycontrol.

Indian auto ancillary companies that already export components to Tesla’s US operations could benefit from additional business if Tesla establishes an Indian plant. "Since these suppliers were chosen based on quality and cost competitiveness, they could continue exporting to Tesla’s global factories while also supplying the Indian market," Khemka added.

Read more: CLSA says Q3 earnings stronger-than-expected, despite consensus doubts

At about 9:20 am, Tata Motors shares edged up 0.2 percent to Rs 675, while Maruti Suzuki gained 0.4 percent. M&M climbed nearly 2 percent, and Hyundai Motor India advanced 0.5 percent in trade. However, the Nifty Auto index traded 0.12 percent lower. The index has tanked over 17 percent in the last six months.

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