Tesla's long-awaited India debut bets on luxury vehicle buyers

A second showroom is expected to open in New Delhi by the end of July, and Tesla has beefed up local hiring and secured warehousing space

Tesla Inc. is opening its first India showroom as Elon Musk’s electric-vehicle maker looks to ply new markets and offset slowing sales where it’s already well established.

A 4,000-square-foot space in Mumbai’s posh financial district of Bandra Kurla Complex will open its doors on Tuesday. It’ll showcase Model Y crossovers made in China with an expected sticker price of more than $56,000 before taxes and insurance, Bloomberg News reported last month. That’s about $10,000 more than the vehicle’s starting price in the US without a federal tax credit.

A second showroom is expected to open in New Delhi by the end of July, and Tesla has beefed up local hiring and secured warehousing space. But with no plans to set up a manufacturing plant in the world’s third-largest automobile market, Tesla’s entry into India is less about racking up immediate sales volume gains and more about gauging demand for its EVs and building up the brand’s image.

“It’s not meaningful from a volume standpoint yet,” said Jay Kale, a Mumbai-based analyst at Elara Securities. “But it plants the brand. Over time, as charging infrastructure improves and the lineup expands, Tesla could scale.”

The long-anticipated move comes as Tesla faces challenges in China and the US, its two core markets. The company’s sales fell last quarter and it’s anxious to avoid a second year of declines after a dismal 2024.

The American EV maker has been ceding ground globally to Chinese rival BYD Co. and India represents an opportunity to grow in a relatively untapped market — due in part to a gamut of protectionist barriers.

While the Model Y is the world’s top-selling electric car, few Indians will be able to afford one. The country’s EV penetration remains under 5%, and luxury cars make up just 1% of total vehicle sales.

Tesla will compete mostly with German luxury carmakers such as BMW and Mercedes-Benz Group AG, not mass-market budget-car players like Tata Motors Ltd., Mahindra & Mahindra Ltd. and MG Motor India Pvt.

Musk’s company has flirted with the idea of establishing a local manufacturing base — something the Indian government has courted and that could sidestep heavy import tariffs — but so far Tesla hasn’t committed to doing so.

India is currently negotiating a trade deal with the US, including a potential reduction in tariffs on automobiles — something Musk has been seeking for years. It’s unclear what impact, if any, the Tesla chief executive officer’s newly strained relationship with US President Donald Trump may have on his company’s lobbying efforts to lower Indian trade barriers.

The Tesla brand’s debut in India follows the resignation in May of its former head of operations in the country. But the Mumbai showroom launch is expected to follow Tesla’s playbook from its early days in China, where marketing buzz preceded an eventual manufacturing investment and sales blitz.