Tesla Says “India is a Very Hard Market” Because of Tariffs, Ahead of Expected Launch

Tesla, which looks set to make its long-awaited debut in India this year, has just reported its Q1 2025 earnings and the numbers are even worse than many analysts had predicted. The company missed its targets with net income down by a huge 71 percent to $409 million, from $1.39 billion for the same period last year. The company also did not share any guidance for its prospects in the near future, indicating that it is unlikely to post growth in the next three quarters. The company has blamed uncertainty in global automotive markets and “rapidly evolving trade policy”, likely referring to multiple recent escalations in import tariffs being issued by the US and China, among other countries, causing supply chain complications.

In response to an analyst question about Tesla’s highly publicised plans to enter India, company CFO Vaibhav Taneja said “We’ve been working on getting into India. India is a very hard market.” He also added: “I don’t want to talk just about tariffs, but the current tariff structure with India is, any car we send in is subject to a 70 percent tariff and there’s also a 30 percent luxury tax on it. So the same car becomes 100 percent more expensive.”

Emphasising that Tesla makes no additional profit even though car prices are that much higher, Taneja said “That creates a lot of anxiety. People feel that they’re paying too much for a car” indicating that the company might have trouble establishing a value-for-money proposition with potential buyers. This is the reason the company has taken a long time, but is still working on its plans to launch here. “It would be a great market to be in; India has a big middle class which we would want to tap. But these things create a little tension which we are trying to work around”.

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A camouflaged current-gen Tesla Model Y was spotted testing in various locations in Maharashtra just a few days ago. Homologation is reportedly in progress, and Tesla has also been publishing multiple notices for job openings in India. The company is likely to own and operate all its own dealerships, with the first one likely to open in Mumbai’s Bandra Kurla Complex soon, with another location in Aerocity, just outside New Delhi, reportedly in the works too. 

Also read: Tata Group-Tesla Join Hands: Report

The popular Model Y and the lower-priced Model 3 are likely to be the first models that Tesla brings to India. The company has enjoyed a reputation for innovation in the automotive and tech industries, although CEO Elon Musk’s political activism in the US and Europe, plus his position as senior advisor to US President Trump have led to waves of protests and boycotts targeting the brand. Sales have fallen by over 60 percent in Germany, where Tesla operates a Gigafactory production facility, and is at risk of losing market share to emerging competitors and established brands as their electric cars become more sophisticated.

Musk has also scrapped previously developed plans to develop a sub-$25,000 car, which would have attracted potential buyers and also been suitable for markets such as India. Instead, he is pushing ahead with autonomous taxis and buses. While the Cybercab will only start being manufactured in 2026, Musk confirmed on the earnings call that Tesla will run a pilot project in the US in June with “maybe 10 or 20” Model Y vehicles.